I’ve sent my response off and here are my key points. If you
would like to read my full response or to talk over any element, then give me a
shout at Rachel.vahey@sky.com
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The Budget proposals are to be welcomed, in that they will
give people freedom to manage their money as they see fit. And I sincerely hope
this will translate into a greater attraction for pensions, and, as a result,
more people invest more money to secure a more appropriate income in
retirement. That, after all, is why a lot of us are here.
But we are in danger of creating a whole host of new risks,
which mean that people may not get full value from their pensions savings in
retirement. I strongly believe we need to do everything we can to give them a helping
hand to achieve their dreams. Otherwise, by introducing this flexibility, we
are not improving their lives, but instead we are merely placing them in a more
difficult situation, where they are unable to live the life they want.
For this pension reform to work, we need two things.
1.
We need to deliver an effective guidance service
so people are aware of the risks they face, aware of their options and aware
how to get advice.
2.
We also need to create the right legislative and
regulatory environment so providers can innovate to develop the best retirement
income products.
The introduction of the guidance needs to be viewed as a
long-term project. Put something in place by April with the right direction of
travel, but continue to develop and change the service until it meets the
criteria and it is right for the vast majority of customers.
The Pensions Advisory Service (TPAS) is the best placed to
take forward delivering the guidance guarantee, working alongside Money Advice
Service (MAS) and Citizen’s Advice Bureau (CAB). Providers should not be
involved – they are not impartial.
Alongside this, the new service, the regulator and the
Treasury must champion - in strong terms – two key messages:
1.
The more people who receive advice, the more
people who will avoid the risks associated with the new pensions regime. We
must actively encourage people to take advice.
2.
People need to shop around for the best products
(whether that’s design or charges or rates). This message is still appropriate
and still needs to be pushed.
The guidance guarantee is challenging but it’s crucial. We
need to get it right – otherwise the implications will be catastrophic.
Something else we need to get right is the developments of
new products. The new pensions regime offers an opportunity for providers to
develop the right products which meet people’s needs, and, importantly, their
wants and desires. Primary legislation needs to be changed so it is flexible
enough to allow this development. Otherwise, people will run the risk of outliving
their money in retirement, with consequences both for the individuals involved
and for society as a whole.
Finally, I don’t think we should just spend next year
designing the new regime and then letting it set sail into the distance.
Instead, I believe we need a formal review of the implications and experience under
the new pensions regime. I acknowledge the Government will monitor this. But I advise
a formal review is established to report on the new pensions regime and
guidance guarantee in 2020, involving external parties representing all
elements of the industry working alongside the Government.
Implementing the new pension freedoms and regime is a
massive challenge. But if we get it right it can only mean good things for
people wanting to make the most of their savings in retirement.
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