The UK has an ageing population, and the highest ever number of people of retirement age. Naturally, this means that people are spending a growing proportion of their lives in retirement, so pensions have never been more important than they are today.
With this in mind, it is vital that the government’s pension policy gives confidence to Britain’s retirees and pension planners, empowering them to achieve their retirement aspirations. This is a hot topic, of course, with a general election just around the corner on 4 July. Whichever party emerges victorious, pension policy reform must be a top priority if the government is to help people across the UK to prepare properly for their retirement. But what does this mean in practice? Well, at My Pension Expert, we are not shy in fighting for the interests of retirement planners, and here is what we want to see from the next government.
Improve access to financial advice
Millions of UK adults aren’t saving enough for their retirement – some are not saving at all. This is bringing Britain to the brink of a ‘pensioner poverty time bomb’, according to the Joseph Rowntree Foundation.
Compounding this issue, many aren’t seeking financial advice, often due to the perceived high cost. Indeed, just 18% of over-40s have sought financial advice amid the cost-of-living crisis, with 52% believing it’s too expensive.
It’s important that the government and the financial industry work together to dispel this myth, and to broaden access to financial advice, making it available to all. To achieve this, using both digital and in-person services will be crucial.
What My Pension Expert is asking from the next government: A well-resourced, public information campaign leveraging old and new media must be launched to emphasise the importance of saving adequately for retirement.
Maintaining a clear boundary between guidance and advice
Financial guidance and financial advice are often confused, but they serve different purposes. Guidance cannot replace financial advice; holistic financial advice, tailored to individual needs, is essential for a secure retirement. So, it is key that the government maintains a clear boundary between the two.
My Pension Expert supports the Treasury and FCA’s proposed new categories of targeted support and simplified advice and believes they will help ensure that consumers are better able to make informed financial decisions.
However, this must not undermine the role and importance of holistic advice or detract from the need to increase access to existing sources of affordable advice.
What My Pension Expert is asking from the next government: We support the Treasury and FCA’s intention to exclude pensions decumulation from the proposed new advice framework, given the complexity and significance of these decisions, and will urge the government and the regulator to hold firm to this position.
Launching the Pensions Dashboards initiative
My Pension Expert is in full support of the development of Pensions Dashboards, which aims to centralise pension information, helping savers more clearly understand the state of their finances and whether they are on track to achieve their desired retirement.
However, this initiative should not end there; it should be the jumping-off point for greater engagement with retirement finances. In fact, our research reveals that only 16% of British savers believe that the Pension Dashboard will change the way that they engage with their pension.
A non-digital alternative should also be provided for the 6% of British households without internet access. This could look like, for example, bi-annual statements by post.
To ensure maximum benefit, the government must explore the different ways in which this technology could be used as a springboard to boost pension engagement and financial literacy.
What My Pension Expert is asking from the next government: The government should use the Pensions Dashboard as a platform to encourage savers to seek financial advice to prepare for retirement.
Promote financial education
Everyone deserves and needs to understand the basics of retirement finances and financial management, and yet it is not treated as a priority. In fact, financial literacy in the UK is among the lowest in the OECD.
To address this, the government must enhance financial education at all levels. This includes improving how financial management is taught in schools as well as providing accessible courses and online resources for adults.
What’s more, a financial education taskforce must be assembled to reform the curriculum, ensuring that vital practical financial skills are taught.
What My Pension Expert is asking from the next government: Teaching hours must be increased and the curriculum for financial education must be improved in schools. There should also be greater monitoring and assessment by regulators of school and college provision of financial education.
Increase transparency in pension transfers
The delays in pension transfers are causing unnecessary stress and uncertainty for savers; the average waiting time for a transfer is 28 days, with some providers taking up to 120 days, our own data has revealed.
So, the government must enforce greater scrutiny and accountability for providers imposing excessive delays. Enhanced transparency would encourage providers to improve their services and rebuild trust with savers in order to remain competitive.
What My Pension Expert is asking from the next government: The FCA should pay greater attention to average transfer waiting times. Regulatory interventions must be introduced to shorten and standardise transfer times.
Foster cross-party collaboration on pension policy
Consistency and stability in pension policies are essential. They cannot change every time there is a new prime minister or government. In the long-term, this is the only way savers will reap the benefits of lasting, positive impact from pension reform.
So, political parties must find ways to work together and create a system that works for everyone, ensuring future generations can plan confidently for their retirement.
What My Pension Expert is asking from the next government: Cooperation must take place among political parties to ensure long-term stability and effectiveness of pension policies.
We will fight your corner
At My Pension Expert, we strongly believe that these policy reforms will play a vital role in making Britons’ financial futures better and brighter. In addressing these points, the next government can significantly improve the retirement outlook for savers, ensuring they have access to the advice, education, and policy stability they need to achieve a happy, financially secure retirement.