With the new pension rules imminent, Our 12th March Spring Symposium held at the Institute of Directors Pall Mall London covered key issues clients face with the radical changes to pension schemes next month. The fact we focused on pension investors needs was unique. A plethora of industry events just tended to focus on industry based issues. As a client focused consultancy, we were keen to elicit the hopes and fears of those on the retirement ‘runway’.
Our speakers and contributors were a blend of service and product providers, government and consumer focused experts. Our aim was to focus on key challenges and opportunities pension investors face:
Engage Insight: We covered our ongoing research into 55-65 year olds in the pensions market place. The key issues this research highlighted was a distrust for guidance and advice, with the majority of investors saying they will go online or take a DIY route of information. Yet 50% felt advice was desirable at retirement. This shows how financial advice is still seen as a transactional service.
They also felt they knew the key challenges post retirement with long term care (LTC) and health issues bring the top two. When asked how they were going to deal with this, there was a distinct lack of knowledge and knowhow. Similarly, with over 50% yet to make a formal retirement plan and over 60% with no strategy to manage market downturns, and 70% confident their pensions will deliver at retirement, this implies there is an overconfidence in investors ability to manage key issues.
The Pension Advisory Service focused on the guidance guarantee and how this will work and provide those needing information with help and support. The key issues here was around the fact that Pensionwise – the government guarantee service, needs to place clear boundaries around the advice and suitability issues. Scams were also discussed, although they are high on the agenda, the fact that TPAS (nor the FCA) can act and regulate them out of the market is a concern. More needs to be done. One e.g provided by the audience is stopping the use of google ad words to promote illegal pension unlocking scams with just three phone calls.
WHICH? provided insight into their consumer protection agenda and good work done on pension scheme charges and the costs associated with transferring schemes and taking funds out post April.
Investec asset management provided an international flavour by focusing on South African pension liberation initiatives. Of note was the ‘living annuities’ initiative, which focused on providing flexibility and control with the investor, something our data showed they want and need.
Octopus investment management focused on a key challenge: Taxation. Their innovative approach to VCT and EIS’s was showcased in three client case studies. A powerful picture was painted for careful tax planning to ensure retirement goals can be met.
Axa Wealth provided a platform view. Balancing guarantees, access and investment shows how intricate the pension planning process is with the new rules in mind. Higher risk, lower incomes and cashflow modelling were key themes.
Dr Ros Altman’s views are well known. Here she took no prisoners with a ‘J’ shaped income needs a real issue at retirement. LTC, inflation and general living expenses are going to be real challenges to retirees. With access to pension monies comes responsibility from the industry to ensure investors make informed choices at retirement.
Finally the panel session included the FCA, Money Advice Service, WHICH? and Ros Altmann. Again Scams reared their head and it was apparent the FCA really need to focus on this and provide guidance for the industry to act fast to stop pensioners being robbed of their hard earned pots.
All in all, plenty of food for thought, we now follow up with our discussion paper due to be published in June to cover all this and much more our research has provided.
