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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?
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