Ros Altmann, former pensions minister, wonders when the industry will start to promote pensions and encourage customers not to take money out too soon.
The People’s Pension recent research highlights tremendous opportunities of pension freedoms being missed.
The findings do not suggest problems with the principles of freedom and choice. They do, however, imply problems in the way the industry has been serving customers which means that the benefits of the new freedoms are not being recognised.
People do not yet recognise the significant benefits that the freedoms introduced in 2016 can offer them. This is a missed opportunity for the pensions industry, which could still be addressed.
Pensions have tremendous advantages over other products, but as long as the public remain unaware of their tremendous advantages they will not make the most of their hard-earned pension savings.
The industry has still not devised the exciting new products or services or even communication tools which can help people take advantage of new freedoms. Easy and good value options for looking after pensions throughout retirement, including environmentally-friendly options, are lacking for the mass market. Despite the opportunities of freedom and choice, which make retaining pension funds for far longer much more advantageous, the customer is still generally facing a choice between drawdown or annuity.
Pensions are the last money people should spend – they are often the most precious of all investments. The only other option tends to be taking cash, which is usually the worst option but often the most attractive to those who don’t recognise the huge advantages which pensions have in terms of long-term growth - favourable tax treatment and support in later life. “Spend your ISAs, downsize your house, use your other investments before you draw on your pension fund”, these are simple messages that have simply not been passed on to the public.
Greater take-up of PensionWise could help: PensionWise customers are very happy with the service but too few people use it. Those who use the guidance service will have initial assistance in making better decisions. This can also demonstrate why they may need help or advice in planning their pensions.
The pensions industry itself has not found ways of promoting pensions and designing more user-friendly products or services that can help and enthuse customers.
The industry has an opportunity to promote pensions and make customers proud of their pensions.