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Retirement Income Summit

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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?

Published in: Economy & Finance, Business
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Retirement Income Summit

  1. 1. Retirement Income Summit 20 June 2012 #retirementincome
  2. 2. WelcomeBaroness Sally Greengross Chief Executive ILC-UK #retirementincome
  3. 3. Gregg McClymont MP Shadow Pensions Minister #retirementincome
  4. 4. Lord KirkwoodFormer Liberal Democrat Spokesperson for Work and Pensions 2007-10 #retirementincome
  5. 5. Nigel WatersonILC-UK Trustee and former Shadow Pensions Minister #retirementincome
  6. 6. Post RDR financial advice may be beyond the means of the average person. How can we fill the advice gap?
  7. 7. Steve Groves Partnership#retirementincome
  8. 8. Post RDR financial advice – Howdo we fill the gapSteve Groves18 June 2013
  9. 9. 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
  10. 10. 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 hasgone, this group could work together and deliver betterconsumer outcomes if we choose to – I’m up for it, I’mpretty sure Aviva are up for it…….”
  11. 11. Tom McPhailHargreave Landsdown #retirementincome
  12. 12. Roger Marsden Aviva#retirementincome
  13. 13. Coffee Break#retirementincome
  14. 14. Good regulation protects the consumerbut it must not inadvertently damage the potential of products and services toincrease pensioner income. How can weensure that the length and complexity of communications required by legislation does not damage communications?
  15. 15. Steve Lowe Just Retirement#retirementincome
  16. 16. Jeff Prestridge Mail on Sundayjustgiving.com/jeff-prestridge #retirementincome
  17. 17. Dean MirfinKey Retirement Solutions #retirementincome
  18. 18. Dean Mirfin
  19. 19. People with average sized pension potsare entitled to reasonable outcomes. How can we improve the pension’s annuity process for the consumer and industry?
  20. 20. Jane Vass Age UK#retirementincome
  21. 21. Reasonable outcomes for modest saversJane VassILC-UK Retirement Income Summit20 June 2012
  22. 22. 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
  23. 23. 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
  24. 24. Alan Higham Retirement Angels#retirementincome
  25. 25. International Longevity Centre UK & The Actuarial Profession’s Retirement Income Summit Chartered Financial Planners
  26. 26. Overview Enlighten Interest Educate Keep it short Keep it simple Validate Implement Make it safe Make it easy FulfilAnnuity Direct is a trading name of Annuity Direct Limited Chartered Financial PlannersRegistered in England and Wales no. 06121251 at Pascall House, Cothey Way, Ryde PO33 1QTIndependent Financial Advisers authorised and regulated by the Financial Services Authority
  27. 27. Ideas for safe & easy • 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 & resolveAnnuity Direct is a trading name of Annuity Direct Limited Chartered Financial PlannersRegistered in England and Wales no. 06121251 at Pascall House, Cothey Way, Ryde PO33 1QTIndependent Financial Advisers authorised and regulated by the Financial Services Authority
  28. 28. Your Retirement, Your Choices.Make sure you make the right ones.Tel: 0500 50 65 75Email: info@annuitydirect.co.ukWeb: www.annuitydirect.co.uk Chartered Financial Planners
  29. 29. Dr Yvonne Braun ABI #retirementincome
  30. 30. Only a minority switch provider – and fewer of those with smaller pots80%70%60%50%40%30%20%10%0% Internal Annuities External Annuities Source: ABI quarterly long-term business survey, Q1 2012
  31. 31. 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 accessibleWhat else will make a difference? Consistency across all parts of the industry A solution to the small pots problem which increases pot sizes
  32. 32. “Defined ambition” Mike Le BrunPolicy Adviser to the Pensions Minister #retirementincome
  33. 33. Closing Panel Thoughts Steve Groves Partnership Roger Marsden Aviva #retirementincome
  34. 34. Retirement Income Summit 20 June 2012 #retirementincome

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