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Retirement Interventions

6 April 2018 marked the three-year anniversary of the introduction of pension flexibility. Whilst the reforms are proving popular, there are some warning signs around customer behaviour that will require changes to ensure customers are suitably protected and informed about their options.

In response, the ABI is proposing a five point plan to improve consumer engagement, understanding and decision making. Each intervention has a common aim: to provide customers with short, simple information about their pension, relevant to their age and circumstances, to encourage them to use guidance and help them make decisions, and will require industry, regulators, policymakers and other relevant stakeholders – either individually or collectively – to take forward aspects of these proposals. 

See the full document here. 

Intervention 1: Tailored and phased customer communications

The industry would like to work with Government and regulators to make improvements to retirement communications, so that they are tailored and targeted, depending on a customer's age and financial circumstance.

Tailored and phased customer communications...

Intervention 2: Mid-life MOT

The industry supports the establishment of ‘Mid-life MOTs’ or reviews, which could act as a useful trigger point to encourage people to take stock, and make realistic choices about work, health and retirement.

Industry principles for designing the Mid-life MOT...

Intervention 3: Prompting more people to use guidance

The industry would like to work with policymakers and regulators to consider how more people could be prompted to use guidance, as a way of creating an additional safety net for consumers.

Prompting more people to use guidance

Intervention 4: Making the retirement risk warnings fit for purpose

In conjunction with the FCA, the industry would like to make the risk warnings more effective so that they are relevant and helpful to both customers and providers. 

Making the risk warnings fit for purpose...

Intervention 5: Improvements to in-retirement communications

The industry would like to work with Government and the regulators to make the communications that customers receive during their retirement more effective.

  • At present: some providers highlight to customers the issue of sustainability i.e. “based on your current withdrawal pattern, your pension will run out at age X or on this day”.

  • Some providers will signpost customers to web content designed to encourage the customer to review their circumstances, choice of funds or withdrawal rates.

  • Others issue alerts in certain circumstances, either due to customer behaviour or market conditions.

Alternatively, providers could consider...

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