Many have emphasised the need to give pension savers an overview of all their pension pots far earlier in the accumulation phase.
Fiona Tait, technical director at Intelligent Pensions, believes: “The most obvious action, as well as doing as much as possible to protect people against the scams, is to create effective customer communications which highlight the key issues clients will have to face and help them to address them much earlier in the process than is currently standard.
“I am very supportive of the idea of a ‘mid-life MOT’, where clients would be encouraged to take stock of their position and assess how prepared they are for retirement while there is still time to implement any changes to their accumulation strategy.”
She says this should take place when an individual has built up around 15 years’ worth of pension savings, but at least 10 years ahead of the point at which they want to access those savings.
“This will allow the individual to ensure they have gathered together the information they need about all of their pensions and investments and to start thinking about the part they will each play in the overall provision of income in later life,” she explains.
“Specific decumulation strategies can then start to be implemented around five years ahead of the planned retirement, based on sound assumptions of when and how this is likely to take place.”
As Gareth James, head of technical resources at AJ Bell, points out: “Currently, the requirements around communication are focused heavily on the lead up to a retirement date that, at best, has ceased to have meaning and, at worst, didn’t exist in the first place.”
Starting early
He agrees with Ms Tait that savers need to start receiving information about their retirement options at least five, and possibly as many as 10, years before they can first access their pensions.
“Communication then needs to continue not only until the point benefits are first taken, but while the pension freedoms are being used,” he notes.
“Providing information to someone at the point of access is almost meaningless if someone is simply taking their tax-free cash with no intention to draw an income for years.
“Similarly, while individuals have the ability to change the level of income they can take at any point, the potential exists for their information needs to change at any point as well.”
What about the auto-enrolment model which Mr Lowe alluded to?
Peter Bradshaw, national accounts director at Selectapension, reasons that individuals are more likely to listen to their employer than the government when it comes to pensions.
“I think, perhaps, the employer could do more because they are probably trusted by employees more than most,” he suggests.
