Fairness, adequacy and predictability

With Pensions Minister Laura Trott wasting no time in progressing her reform agenda for defined contribution pensions, there are signs she may next train her sights on decumulation.

The Challenge

Until 2015, accessing your pension meant – for most people – converting a pot of money into a guaranteed income for life. But since the pension freedoms, over-55s have had a much wider choice over what to do with their pension.

With this increased flexibility has come complexity, with savers suddenly exposed to longevity, inflation and investment risks they’re poorly equipped to negotiate.

Vital support is already on hand through professional advice and guidance services, including those available to everyone at no cost, such as Pension Wise and Money Helper. But accessing these services requires an active decision from the retiree to seek help and comes with capacity and/or cost constraints. As FCA data bears out, only around a third of people get the help they need.

The Solution

Our mission at the PLSA is to help everyone achieve a better income in retirement. As such we’d like to see all savers getting fuller support from their schemes and providers in decumulation. At present, due to regulatory uncertainty about the advice/guidance boundary, it’s sometimes riskier for schemes to try to help their members than to do nothing. This cannot be allowed to persist. That’s why we’re calling on government, regulators and the pensions industry to adopt the PLSA’s Guided Retirement Income Choices (GRIC), to support retirees with the complex decisions, irrespective of what kind of pension or provider they have.