Committee questions former pensions Ministers on pension freedoms
1 November 2017
The Work and Pensions Committee questions pensions experts and the architect of pensions freedoms, former pensions minister Steve Webb, on pension freedoms, advice and guidance services and the pensions market.
The pensions freedoms introduced in 2015 have given those close to retiring a new financial decision to make, for many the biggest of their lives.
For the majority the freedoms are a boon, and they have provided a necessary alternative to historically poor annuity deals. However, that is a concern that persists today, as former pensions minister Baroness Ros Altmann who will also appear this week recently raised in written evidence.
Concerns about scams
But there are also major concerns about scams and that some people are making very poor decisions for themselves: putting their retirement plans and financial security at risk and potentially falling back on the welfare safety net.
While the free, independent Pension Wise service is viewed favourably by most who use it, they are very few. In the one case where seeking advice is currently mandatory - when moving a defined benefit pension pot of over £30k - there is evidence that people do not heed the advice they get, whilst for those that do, the FCA has found that it is often unsuitable or of unclear benefit to the customer.
Low take-up of guidance
Evidence thus far points to low take-up of guidance, very little shopping around and high levels of disengagement and distrust. A large proportion of drawdown sales are non-advised.
How can the advice sector close this wide advice gap in the pensions mass market, and what should the pensions industry be doing to improve value, clarity and choice in the products that it offers?
Will a single, public financial guidance body make a tangible difference to the provision of effective guidance? Who can most effectively and reliably deliver a one-stop "pensions dashboard" that will increase consumer engagement with their retirement savings: the industry, or the public guidance service?
And there are other questions about the differences between the two pension "tracks", public and private: should the Department of Work and Pensions reconsider its decision earlier this year to stop the National Employment Savings Trust's (NEST) drawdown option for its members?
Wednesday 1 November 2017, Committee Room 15, Palace of Westminster.
- Baroness Ros Altmann, Former Pensions Minister
- Michelle Cracknell, Chief Executive, The Pensions Advisory Service (TPAS)
- Peter Vicary-Smith, Chief Executive, Which?
- Andrew Seager, Director, Citizens Advice
At approximately 10.15am
- Gary Bottriell, Board Member, Personal Investment Management & Financial Advice Association (PIMFA)
- Yvonne Braun, Director of Policy, Long-Term Savings and Protection, Association Of British Insurers (ABI)
- Otto Thoresen, Chairman, National Employment Savings Trust (NEST)
- Sir Steve Webb, Director of Policy, Royal London
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