Press

London: A report by leading pension experts in the UK highlights the failure of the industry to help retiring workers maximise their retirement income and argues that those who do not offer appropriate guidance are failing in their duty of care.

To download a copy of the report please click here

Given the shift from defined benefit (DB) to defined contribution (DC) pensions, hundreds of thousands more people are going to be retiring [from DC accumulation] in future years. This has suddenly put a spotlight on the issue. Members not considering all of their options as they approach retirement and who are no longer under the care of trustees, risk the benefit of all of those years of controls and processes being wiped out overnight.

These are some of the latest conclusions from a Clear Path Analysis report ‘Preparing Pension Members for Annuities’ published today.

Graeme Riddoch, Director at The Open Market Annuity Service, wrote of his concerns for members: “Failure to help our retiring workers maximise their retirement incomes is a national scandal, one which ultimately costs us all in terms of lost tax and higher benefits payments. Trustees and Employee Benefit Consultants (EBCs) are the gatekeepers to a better future. The solutions are here today, but they need to be deployed in the corporate pension space if our retiring workers are to look forward to a better tomorrow”.

Evidence from a Department of Work and Pensions report on trust and confidence in pensions and providers suggests around twice as many people trust their employer to ‘act in their best interests’ than trust either the government or financial services industry.

Reflecting on behavioural research David Harvey, Director of Corporate Pensions Development at Partnership Assurance, adds: “People will arguably do what they are told or follow the path of least resistance because they do not know better.”

Considering options available to those providing corporate pensions, Graeme remarks: “The good news is that we are on the cusp of a revolution driven not only by political and regulatory heat, but also by the arrival of new platform technology that will allow increasing numbers of retirees to scour the market for better deals”. Platforms enable retirees to take control of their own decisions, by giving them easily-understood information on retirement options such as inflation-protection, dependants’ pensions and death benefits, along with true whole of market, real-time, annuity quotes. It focuses on helping them select the right type of annuity and then finding the best rate available. The data equals that available to IFAs and allows retirees to opt in to full advice if they wish.

Click here to obtain a full copy of the Clear Path Analysis report ‘Preparing Pension Members for Annuities’.