As Pensions Awareness Week draws to a close, Rob Yuille, Head of Long-Term Savings at the ABI, reflects on the work the industry and the Money and Pensions Service is doing to encourage people to get expert help and plan for their retirement.
It’s Pensions Awareness Week, but depending where you are in life, awareness may not be enough – it might be time to actually do something about it.
The Money and Pensions Service this week reported on how those who have recently retired would advise younger people about retirement planning. Top of the list was to save more, and then to plan earlier. Yet over a third (37%) of over 50s are leaving their retirement plans until two years before they retire, or won’t prepare at all.
The industry is continuously increasing its own awareness of how to help customers plan and make decisions.
- Last month, the Money and Pensions Service published results of trials with providers that resulted in an increase of around three times in people accessing guidance, by changes to make appointments easy and part of the process. Those who were especially more likely to take up guidance were those who were considering their options, rather than those who had already made up their minds.
- Yesterday, NEST Insight published research that finds that changing messaging to make it more relevant to self-employed people has the potential to engage them in considering pension saving.
- Right now, the ABI is working on a project about how firms help customers make decisions about pension withdrawals – when, how much and the implications of those decisions.
A common thread in all of these is the need to catch people’s attention and encourage them to get expert help. But it’s not that straightforward to do and Government regulators are acting to prompt more people to receive impartial guidance. The FCA is due to consult on rules to change the retirement process so that customers must opt out of receiving guidance; and DWP is legislating to require people to receive guidance where a scam is suspected. Driving more people to guidance is welcome, but it’s harder to do once they’ve made their minds up – illustrating that help should come as early as possible.
In addition, providers and the Money and Pensions Service are still constrained in how far they can go without giving regulated financial advice. That’s why the FCA’s Call for Input this week on Consumer Investments is a good opportunity to make some significant changes to benefit consumers.
As this awareness week comes during a pandemic, a period of great uncertainty, it shows that those recent retirees are right to say when it comes to making decisions on your pension, it’s important to plan early and get expert help.