Crucial details still missing just six weeks away from launch of new pension reforms
Director General Huw Evans reiterates industry support for reforms, but raises concerns on readiness and calls for best endeavours beginning in April
Despite unequivocal support for the pension reforms launching in April, new ABI Director General, Huw Evans will raise real concerns about how prepared the Government, regulators, providers and advisers can be for go-live in his speech at the ABI Retirement Conference today, 25 February.
He will warn against any form of blame game and call for a ‘best endeavours’ effort from everyone with a stake in making the reforms a success to work together and build momentum from April as the new system beds down.
In his speech to the ABI Retirement Conference Huw Evans, ABI Director General will say:
“The ABI and many of the providers we represent welcomed the Chancellor’s Budget reforms within hours of his announcement because it was the right outcome for savers. We want the reforms to succeed and for customers, to have a meaningful set of choices when it comes to decisions about their retirement incomes. No ‘ifs’, no ‘buts’ we want these reforms to work. However, it is impossible to stand here six weeks before 6 April and say the Government is ready – that is a statement of fact not an attribution of blame."
Huw Evans will raise outstanding questions which the pensions industry has repeatedly sought clarity on, which remain unanswered just six weeks before launch, when providers are already sending information to people facing retirement in April:
- Pension Wise has no phone number yet so there is nowhere for pension providers to direct people to if they do not have internet access.-
- We still don’t know how the Pension Wise guidance sessions will work, how they will be structured and how the session will be recorded so providers and advisers can know what customers have discussed and what was covered.
- We do not have any official modelling on expected numbers to use the service and estimated waiting times which can be shared with customers.
- We do not know the final tax rules on annuity payments to beneficiaries.
- We do not know how lump sum payments by trust-based schemes will be regulated.
- We are also still waiting for crucial rules from the FCA to guide providers on how they need to interact with customers, especially those who refuse to take up Pension Wise guidance, although we understand this is imminent.
Huw Evans will say:
“The Government has simply not been able to deliver enough at this stage to ensure the reforms have a flying start when they go live. Critical pieces of the jigsaw are still missing and will not be in place in time. I see no point in a blame game and would hope this will not develop as the reforms go live, despite the pressures of the pre-election period. I would like all of us who are engaged in trying to deliver successful reform to commit to a ‘best endeavours beginning’ for early April where we recognise the inevitable challenges of a new system going live in a spirit of openness, constructive comment and determination to gain momentum as we all get used to how the new world is going to work. This is in everyone’s interests.
“We also need to be careful to remind the public that April 6 is not a deadline, it is simply the start of new freedoms. People should not be rushed into making quick decisions about pension savings they may have accumulated over thirty years.”
The ABI has also worked with ideas42 to produce a joint report exploring the behavioural challenges policymakers need to factor in when thinking about how to engage people in their retirement decision-making. It proposes some ideas for overcoming these hurdles.
This week the ABI has also published thinkpiece, Retirement 2050 which aims to provoke discussion on meeting the retirement needs of Generation Y and Z, shifting focus away from baby boomers onto future retirees who will face a very different set of challenges. Ideas from these publications will be discussed at the conference.
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