The Pensions and Lifetime Savings Association (PLSA) has said that more can be done to support and protect savers as they decide how to access their pension in retirement.
The association has submitted recommendations to the Work and Pensions Select Committee inquiry into the Pension Freedoms asking for a new set of product, communication and governance standards.
These recommendations should “pave the way for pension providers to give greater support to savers at retirement, irrespective of the size of their balance, their level of engagement, or what type of solution they use to access their pension,” said the PLSA.
Pension freedoms have given UK savers new possibilities and options with their savings, however, “a bridge is needed to help savers transition from a system that uses the power of inertia to successfully bring them into pension saving through the complex decisions they must take to access their pension saving in retirement”, it added.
“The industry, government and regulators have acknowledged the challenges that savers face but have not yet gone far enough.”
Nigel Peaple, director of policy and advocacy at the PLSA, said: “The pension freedoms revolutionised the way in which people can access their pension savings; now it is time to build on them to support people in making the retirement decisions that are right for them.”
He added that as the pension system matures pension funds should be able to provide better information and more suitable, blended products to help savers manage the opportunities and challenges they encounter.
Guided Retirement Income Choices
The PLSA’s Guided Retirement Income Choices is a framework that allows pension funds to more effectively help savers balance the longevity, inflation and investment risks they face to make the most of the opportunities they have at retirement, Peaple said.
The association is calling for a new statutory obligation on pension schemes, designed according to appropriate governance standards, requiring them to provide helpful guidance and sign-posting to suitable products.
Its proposed framework allows product providers to build retirement income solutions that blend the best features of cash, drawdown and annuity products commonly used for retirement today.
“We believe this is the best way to give providers the confidence they need and savers the support they need,” Peaple said.