retirement income summit
DESCRIPTION
At the end of February 2012, ILC-UK, with the support of Partnership, published a report which explored the impact of the Retail Distribution Review (RDR) on people with small pension pots.Whilst the report supported the principles of the RDR, it expressed worries about the creation of an ‘advice gap’ where the poorest and least well-off pensioners might fail to receive critical financial advice.Since the publication of the report, Government, the FSA and HM Treasury have taken forward a number of positive policy initiatives, some of which addressed some of the issues in the ILC-UK report. The ABI has developed a new code of conduct for members which will support the consumer to take the open market option. The DWP has been developing “operation big pension pot”. And the FSA has published guidance on simplified advice.However, the problems highlighted in the ILC-UK report are far from solved and there remain a number of immediate challenges. The combination of the end of compulsory annuitisation, the introduction of the RDR, the growth in the number of small pension pots and the introduction of auto enrolment will require further policy action in the short term, and certainly before 1 January 2013.This summit was convened with a view of creating a policy consensus to tackle the challenges ahead. Following the Summit, ILC-UK will publish a report which sets out the recommendations which emerge from the event.The Retirement Income Summit focused on three specific themes. Senior representatives from Government, industry and consumer organisations debated Post RDR financial advice may be beyond the means of the average person. How can we fill the advice gap? People with average sized pension pots are entitled to reasonable outcomes. How can we improve the pensions annuity process for the consumer and industry? Good regulation protects the consumer but it must not inadvertently damage the potential of products and services to increase pensioner income? How can we ensure that the length and complexity of communications required by legislation does not damage communications?TRANSCRIPT
Retirement Income Summit
20 June 2012
#retirementincome
Welcome
Baroness Sally Greengross
Chief ExecutiveILC-UK
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Gregg McClymont MPShadow Pensions Minister
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Lord KirkwoodFormer Liberal Democrat Spokesperson for
Work and Pensions 2007-10
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Nigel WatersonILC-UK Trustee and former Shadow Pensions
Minister
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Post RDR financial advice may be beyond the means of the average person.
How can we fill the advice gap?
Steve GrovesPartnership
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Post RDR financial advice – How do we fill the gapSteve Groves18 June 2013
Backdrop
Start from a low base for average consumers Around 40% of people shop around Nearly 100% of those with pots over £100k shop around RDR will make advice more expensive By removing cross subsidies from big funds to average
funds Are we heading for an Annuity Apartheid? This isn’t just an RDR issue, it exacerbates an existing
market failure Therefore its lazy to simply blame RDR Need Industry, Government, Regulators, Insurers and
IFAs to work together
5 Recommendations
Lets all take the advice gap seriously – One key measure of our industry is how it works for ordinary people
Lets find a default option that can make simplified advice work for average funds and simple needs
Lets examine proportionality in regulation and see if we can make things simpler for customers
Life Offices need to use these changes to make it far simpler and far less intimidating to shop around
Advisers need to develop efficient, differentiated solutions to meet the various customer needs and wants.
“The time for blaming each other for market failures has gone, this group could work together and deliver better consumer outcomes if we choose to – I’m up for it, I’m pretty sure Aviva are up for it…….”
Tom McPhailHargreave Landsdown
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Roger MarsdenAviva
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Coffee Break
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Good regulation protects the consumer but it must not inadvertently damage the
potential of products and services to increase pensioner income. How can we ensure that the length and complexity of communications required by legislation
does not damage communications?
Steve LoweJust Retirement
#retirementincome
Jeff PrestridgeMail on Sunday
justgiving.com/jeff-prestridge
#retirementincome
Dean MirfinKey Retirement Solutions
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Dean MirfinGroup Director
The Art of Communication
• Purpose• Repetition• Creativity and Balance• Challenge
People with average sized pension pots are entitled to reasonable outcomes. How
can we improve the pension’s annuity process for the consumer and industry?
Jane VassAge UK
#retirementincome
Reasonable outcomes for modest savers
Jane Vass
ILC-UK Retirement Income Summit
20 June 2012
What is average?
Distribution of total wealth in DC funds across individuals with at least one DC pot
Source: IFS, Fund Holdings in defined contribution pensions, 2012
Our priorities
• Making it easier to move between all parts of the retirement income process
• Improved transparency• Fairer treatment for small savers• Better value for all savers• Innovation in the interests of consumers
Alan HighamRetirement Angels
#retirementincome
Chartered Financial Planners
International Longevity Centre UK & The Actuarial Profession’sRetirement Income Summit
Overview
Annuity Direct is a trading name of Annuity Direct LimitedRegistered in England and Wales no. 06121251 at Pascall House, Cothey Way, Ryde PO33 1QTIndependent Financial Advisers authorised and regulated by the Financial Services Authority
Chartered Financial Planners
Enlighten
Fulfil
InterestKeep it short
EducateKeep it simple
ValidateMake it safe
ImplementMake it easy
Ideas for safe & easy
Annuity Direct is a trading name of Annuity Direct LimitedRegistered in England and Wales no. 06121251 at Pascall House, Cothey Way, Ryde PO33 1QTIndependent Financial Advisers authorised and regulated by the Financial Services Authority
Chartered Financial Planners
• Default to check ceding scheme- 1 in 7 could lose out otherwise
• Agree standard discharge process- Fidelity & Scottish Life good practice
• Recognise good behaviour• Challenge bad & resolve
Your Retirement, Your Choices.Make sure you make the right ones.
Chartered Financial Planners
Tel: 0500 50 65 75Email: [email protected]: www.annuitydirect.co.uk
Dr Yvonne BraunABI
#retirementincome
0%
10%
20%
30%
40%
50%
60%
70%
80%
Internal Annuities External Annuities
Only a minority switch provider – and fewer of those with smaller pots
Source: ABI quarterly long-term business survey, Q1 2012
How can we improve the process for small pots?
The ABI Code of Conduct on Retirement Choices will ensure our members:
Provide clear and consistent communications to ensure customers are able to make informed decisions
Highlight different types of retirement income, particularly enhanced annuities
Clearly signpost customers to sources of advice and support, from regulated advisers and others
Establish transparency in the annuity market so that it is more easily understandable and accessible
What else will make a difference?
Consistency across all parts of the industry
A solution to the small pots problem which increases pot sizes
“Defined ambition”
Mike Le BrunPolicy Adviser to the Pensions Minister
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Steve GrovesPartnership
Roger MarsdenAviva
Closing Panel Thoughts
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Retirement Income Summit
20 June 2012
#retirementincome