Savings products review may be key to flexible retirement - Cooper
UK - Yvette Cooper, the UK secretary of state for work and pensions, has hinted there may need to be a review of financial products within the saving industry, to enable individuals to have a more flexible retirement by working longer or part-time if required.
In a keynote speech to the NAPF conference yesterday, Cooper touched on issues such as the impact of the financial crisis on pensions, and the increase in longevity, and reiterated that "the default retirement age does need to be reviewed" in an attempt to support flexibility in the workplace.
She noted that for various reasons people want to continue working past the age of 65, either on a full or part-time basis, and said this should be supported but added: "That will also mean we have to think again about the financial products people need for a flexible retirement."
To move the debate forward, ahead of the official review of the DRA next year, Cooper has launched a "call for evidence" on the issue to gather feedback from pension funds and other stakeholders on the future of the default age.
She said while Lord Turner and the Pension Commission's work was the "vital underpin" of the future of pension provision, "there are still other challenges".
This could include "how we look at different ways of sharing risk", and also the need to consider how to support people saving for other things. Although she warned "this should not be at the expense of retirement savings. It should be an addition to it, not a replacement".
Cooper added: "We want to build towards something with more flexibility for people to decide whether to continue working. But it depends on how much flexibility can be given in other savings."
In response, Joanne Segars, chief executive of the NAPF, said: "Let's get the reforms right, and then let's get on with them. And let us not be distracted by talk of abandoning pensions in favour of more general short-term savings products. There are already plenty of ways people can make short-term savings. The problem our nation faces is one of under saving for old age And that is not a problem that will go away any time soon."