Jess List, Pension Technical Manager at Curtis Banks, talks to Rebecca Tomes about the changing world of pensions – exploring how the industry has changed in recent years, which areas advisers find most challenging and the significance of the Covid-19 pandemic in propelling these changes.
RT: Could you tell us about your background and explain your role at Curtis Banks?
JL: I joined Curtis Banks, formerly Suffolk Life, back in 2011- straight after completing university. At the time, I didn’t have any understanding or knowledge of pensions at all – but quickly became interested in the technical rules/issues and started picking up the complex problem-solving type queries, as I enjoyed those. I ended up moving into the product area of the business just as the pension freedoms were announced; and getting the business ready for all the changes was definitely a baptism of fire. That role has since morphed into what I do currently, which has more of a focus on answering internal and external technical queries, writing technical support materials (e.g. factsheets, case studies), monitoring developments and changes from around the industry (whether it’s legislative or regulatory changes) and writing for/speaking to other professionals in the industry.
RT: How has the industry changed over the years, do you think it has been for the better?
JL: I think the industry has become quite a bit more complex – even in the 10 years that I’ve been in pensions – just in terms of the rules and number of small amendments/transitional provisions which have been added over the years. There’s so much for advisers and clients to take into account now because with any given rule, as it is today, you almost have to backtrack over all the elements that have changed since it was introduced, and you end up with layer upon layer of changes.
Whether or not it’s been for the better I think depends on the type of saver and where they are on their journey. If you look at people who are currently saving for retirement – and particularly those who are lower earners – we now have Auto Enrolment. This has been a massive positive, as it has meant that millions of people have begun saving who either did not plan to save at all or were not thinking about saving until a later date. However, I do feel that this desperately needs follow-up action to keep the momentum going – to get those people even more engaged with their pension and thinking about whether they need to save more. Nevertheless, I think people in that category are probably less affected by some of those complex layers of changes that I mentioned before.
On the other hand, I think if you are saving as a higher earner, you have a lot more to think about now. The lower annual allowance and carry forward, for example, is a lot more complicated than when we just had a higher annual allowance. There is also the Tapered Annual Allowance, the Money Purchase Annual Allowance – all these aspects to take into account and yet I don’t believe there’s any evidence that there’s a better understanding across the board of things like tax relief. There is also the constant threat of tax relief being removed, which comes up every now and again in general news stories. This causes people to worry about how things are going to change which is off-putting: people don’t want to learn about the rules now when they’re constantly hearing that the rules change all the time.
For people who are retiring now however, I think there is a lot more freedom. I believe pension freedoms did achieve the element of choice, but with that comes more complexity and a lot of potential pitfalls. I think particularly with low-earning retirees, who are less likely to have a financial adviser, there are greater risks of poorer outcomes now. However, even with higher-earning retirees, who have a lot more flexibility and can really build the retirement they’re looking for, there is still all that complexity and the pitfalls to avoid. So do I think it’s better? I think it probably depends on the circumstances.