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Pensions freedom: ‘Critical’ pieces of jigsaw missing, says ABI

by: Carmen Reichman
  • 25/02/2015
  • 0
The Association of British Insurers (ABI) has called on the industry to fully support upcoming pension changes but warned “critical pieces of the jigsaw are still missing and will not be in place in time”.

Speaking at the ABI Retirement Conference on 25 February, director general Huw Evans (pictured) raised concerns about the government’s delivery of the pension reforms. He said it had not done enough to ensure the reforms have a “flying start” when they go live on 6 April.

He called on the industry to avoid playing “any form of blame game” and instead commit to a “best endeavours beginning”, helping each other with constructive comment where needed.

The government has been reforming the pension system over the last year to give savers access to a wider range of choices in retirement, including income drawdown.

Evans warned a number of questions remain unanswered, but providers are already sending information to people facing retirement in April.

He said: “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.

“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.”

He added: “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 pointed out a number of uncertainties for providers operating in the new pensions landscape:

  • Pension Wise has no phone number yet
  • Uncertainty about how the Pension Wise guidance sessions will work
  • No official modelling on expected numbers to use the service and estimated waiting times
  • Final tax rules on annuity payments to beneficiaries still unknown
  • Unanswered questions on regulation of lump sum payments by trust-based schemes
  • Still waiting for crucial rules from the Financial Conduct Authority to guide providers on how they need to interact with customers.

Hargreaves Lansdown head of pensions research Tom McPhail said he agreed with the ABI’s concerns, saying the industry will not be ready for the changes in time.

“We have consistently warned since very soon after the Budget last March that the government had set a very ambitious timetable to have everything ready in time for this April.

“These reforms are overwhelmingly popular and in the long term will do much to reinvigorate pension provision in the UK.

“Our worry is that because the reforms are being introduced so quickly, many pension providers won’t be ready in time.”

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