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Pensions – The Hard Work Starts Here

6th April is just the start, says Steven Cameron, Regulatory Strategy Director at Aegon


 

For many in the industry, the Stephen Cameron Aegon6 April became an all consuming deadline for making sure we had everything in place to offer customers access to the new pension flexibilities.

We’re delighted to have hit this deadline ‘on time and online’ as our chief executive Adrian Grace put it, but in reality, the 6 April was just the start of the journey.

Now the reforms have arrived, I’m glad to see the industry and the regulator’s attention turning to make sure people are given the best guidance and advice to help them make the most appropriate decisions for their own circumstances.

Financial advisers have a key role to play, although one of the challenges will be providing their services in an effective and economically viable way to those with modest pension savings.

To help consumers, including those at this end of the scale, the Government has created Pension Wise. It’s also the reason why Aegon has developed its Your Retirement Planner. But as an industry it’s imperative we don’t let any customers fall through the gaps.

This was emphasised by the Financial Conduct Authority’s (FCA) decision to require pension providers to present all customers with a final set of ‘retirement risk warnings’ before processing their retirement request and shows just how seriously it’s taking consumer protection.

The FCA has also been looking at potential problems in the future and in recent days it has published its report on the retirement income market citing a number of changes it wants to introduce in the years ahead to make the market work better for consumers.

From April 2016, if a customer has decided to buy an annuity, firms providing a quotation will have to give more detail around how their annuity compares to others in the market. Exactly how this will work in practice needs more examination and it’s good the regulator is going to consult further to make sure it finds the most practical and effective solution possible.

It’s also positive for pension savers that the FCA is working with the Government on developing a Pensions Dashboard that will pull all of a customer’s pensions together and allow them to  see them all in one place.

Getting the right design for this dashboard will be essential if it is to prove effective for customers. My own belief is that a standalone database of everyone’s pensions would not be the best or most cost effective way to go.

Instead I’d like customers to be able to instruct their pension provider or scheme to ‘pull together’ data on all their other pensions. That will need an industry framework and that’s where I’d like the FCA to focus.

If we get this right then I hope the dashboard will encourage people to engage earlier and more meaningfully with their pension savings. This will let them understand how much they’re likely to have when they retire and take remedial steps if their savings are falling short of their aspirations.

But while there are protections already in place, and more support to come, we need to be very vigilant against the threat of scams. Programmes on television and articles in the media have highlighted the threat posed by criminals looking to entice people into handing over their lifetime pension savings which will supposedly be invested in fantastically performing investments. Often, they’ll never see their money again.

This is why providers, advisers and regulators all need to work together coherently and stop people becoming easy targets for criminals, determined to relieve them of their pension savings. Helping customers  understand the benefits – and the risks – of the new flexibilities will be a good place to start and will  make it harder for the scammers to dupe them.

So just as we’ve completed the work to hit the 6 April deadline, it’s now all hands to the pump to make sure we encourage customers to make the most of the new freedoms –  safely, wisely and without  rushing into anything they’ll later regret.

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