In the following analysis, Ian Bell, head of pensions at RSM UK, predicts the key issues and trends that are likely to be at the forefront of the pensions sector in 2025.
2025 looks set to be a big year for pensions, and one which is likely to give advisers, paraplanners and their clients much to think about.
Sharing his views on what’s on the pensions radar, Ian Bell, head of pensions at RSM UK, comments: “2025 may well be the year that public awareness of pensions goes up a notch, as pensions saving becomes more visible with the launch of the first pensions dashboards. It’s hoped pensions dashboards will be a game changer for pensions, improving pensions literacy and encouraging more people to save greater amounts at an earlier age, something we know must happen to avoid the current prospect of poverty at retirement for many.
“As more people become aware of what pension savings they have, how they are performing and what income they might expect at retirement, public pressure on the government to do more to support pensions savings will likely increase. People are also more likely to actively seek advice on how best to invest to get the most out of their retirement savings and how they can best use their pensions pot at retirement to give them an income for life.
“It remains to be seen what the Pension Schemes Bill will deliver, but it’s hoped savers will get better value for money and will receive better service and more support from their pension providers. This should lead to bigger pensions pots and better investment choices in future.
“Digital technology and AI will come to the fore for pensions providers, streamlining processes and reducing administrative tasks, freeing up employees to focus on other tasks. AI may support consumers in making decisions about what to do with their pension pots, but at the moment this is no substitute for qualified human financial advice, and the two will work together for the foreseeable future.
“We are likely to see the demise of the ‘finfluencer’, as the FCA cracks down on those giving financial advice on social media platforms without any qualifications, or recommending dubious high-risk investments.
“Unfortunately, with the increased use of digital tools and customer data comes increased risk of cyber threats and scams. Scammers could make use of government initiatives such as pensions dashboards as an opportunity to trick consumers out of their pensions savings. While consumers are continuing to wise up to the types of tricks scammers use and are much more sceptical of unsolicited offers to improve returns by transferring their pensions savings, there is still work to be done to raise awareness of this ever-evolving threat.
“We will also see the acceleration of many DB (defined benefit) schemes derisking through buy in and buy out products with insurers. This is the result of better scheme funding and more players coming into the market, increasing capacity and improving pricing. It will take many years for all DB schemes to reach this stage, but we will see the market accelerate on this front next year. We will also see the interest in superfunds increase, with more players entering the market now that the Clara superfund has demonstrated there is demand for a further derisking option.”
