Industry experts at a recent IFA industry panel concluded that there was little infrastructure for people to effectively manage their own pensions and that just one in five have adequate provisions for retirement, or feel confident about long-term financial planning.
The comments came out of the Momentum UK’s Financial Wellness Roundtable which included industry figures Lucian Camp, of Lucian Camp Consulting; Margaret Snowdon OBE; unbiased Founder Karen Barrett; and, Andy Davies, Head of Retail Sales at Momentum UK.
Camp said that the financial planning sector was ‘deluded’ to think that it could comfortably adapt from DB to DC pension schemes and that there was ‘collective delusion’ amongst the financial services industry about the move to DC. He said that clients had effectively gone from “…buying package holidays to having to design and build the planes to take them there.”
Research from Momentum UK’s latest Financial Wellness Index shows that just one in five people feel they have adequate provisions for their retirement. This figure drops to 7% for people aged 16 to 24. The figures also showed that just 46% of adults in the UK currently have an occupational, or workplace pension, only 14% have a private pension and just 3% invest in units, or investment trusts.
And although those moving from DB to DC pension schemes are having to take a more hands-on role with their retirement planning, they lack, says Camp, the infrastructure to manage this effectively. Davies agreed, saying that we had “…moved from the golden age of DB to the terrifying world of DC…”
Managing Director of Momentum UK Samantha Seaton added: “We’ve seen a monumental shake-up of the pension’s landscape in the last couple of years and the transition was always going to be rocky. But as an industry, we need to be doing more to support people in making the right decisions for their future.
“Financial advisers can become the infrastructure, which is currently lacking, and while there are big challenges ahead, this also presents a great opportunity. To make the most of this, IFAs and industry stakeholders need to regularly sit down and agree on the best way to keep moving forward as in industry. This may involve better utilising technology and tools to make financial advice more accessible to the mass market.”
Momentum UK is part of MMI Holdings, one of the largest financial services groups in South Africa.