Baroness gives her thoughts
on pensions from the customer perspective.
The findings do not suggest problems with the principles of
freedom and choice. They do, however, imply problems in the way
the industry has been serving customers which means that the
benefits of the new freedoms are not being recognised.
People do not yet recognise the significant benefits that the
freedoms introduced in 2016 can offer them. This is a missed
opportunity for the pensions industry which could still be
addressed. Pensions have tremendous advantages over other
products but as long as the public remain unaware of their
tremendous advantages, they will not make the most of their
hard-earned pension savings.
The industry has still not devised the exciting new products or
services or even communication tools which can help people take
advantage of new freedoms. Easy and good value options for
looking after pensions throughout retirement, including
environmentally friendly options, are lacking for the mass
market. Despite the opportunities of freedom and choice, which
make retaining pension funds for far longer much more
advantageous, the customer is still generally facing a choice
between drawdown or annuity.
Pensions are the last money people should spend – they are often
the most precious of all investments. The only other option tends
to be taking cash – which is usually the worst option but often
the most attractive to those who don’t recognise the huge
advantages which pensions have in terms of long-term growth,
favourable tax treatment and support in later life. Spend your
ISAs, downsize your house, use your other investments before you
draw on your pension fund. These are simple messages that have
simply not been passed on to the public. Quite astonishing
really!
Greater take-up of PensionWise could help: PensionWise customers
are very happy with the service but too few people use it. Those
who use the PensionWise guidance service will have initial
assistance in making better decisions. This can also demonstrate
why they may need help or advice in planning their pensions.
Industry has an opportunity to promote pensions and make
customers proud of their pensions. The pensions industry itself
has not found ways of promoting pensions and designing more user
friendly products or services that can help and enthuse
customers.
