Age UK launches 8-point plan to help savers
Published on 16 December 2014 12:01 AM
Age UK has launched an 8-point plan to help savers make the most of pension reforms.
As the most radical reforms to private pension saving in a generation get a step closer to becoming law, Age UK has launched an 8-point plan to help people make the most of the changes.
The plan is based on the research and the conclusions of its new report Dashboards and jam-jars (PDF 2 MB) and its Age UK Financial Services commission, which reported earlier this year.
The plan calls for:
- additional money management tools to help people avoid running out of money or overpaying tax unnecessarily if pensions are withdrawn too quickly
- private pension decisions to be integrated with decision-making on state pensions and benefits to maximise income
- quality standards to be set for retirement income products so that charges are controlled and pension scheme governance is strong
- guidelines to be agreed with lenders about how they will treat small pension pots, so that lenders do not press people to use their pension pot to repay a loan if that is not the appropriate solution
- strong lead agency to be nominated to reduce the risks of pension scams, which to date have totalled £495 million
- building in protections for those who do not take up guidance, including a potential cooling off period
- design default options for the non-expert, so that disengaged people get a reasonable outcome
- Government should report regularly on the outcome of pension reforms.
More people than ever before now have private pensions thanks to the introduction of auto-enrolment. But for many retiring in the next few years the amount will be modest - typically around £20,000. Age UK believes they and every other private pension saver deserve to get the best deal and protection for their hard earned savings.
The new pensions legislation, about to get its second reading in the House of Lords, will give people access to impartial financial guidance on retirement. But Age UK is concerned that unless checks and balances are introduced to help people navigate their way through the new pensions landscape, the reforms will leave many, particularly those on modest incomes, exposed.
In addition, many pensioners may not access the new guidance at all. For others there will inevitably be long gaps between receiving guidance and using their pensions, making additional safeguards essential so that everyone fully understand the financial implications of their pension decisions.
Caroline Abrahams, Charity Director of Age UK said, 'We welcome the flexibility that the pension reforms will give us in terms of how and when to spend our savings. But it's important that people fully understand the implications and consequences of their financial decisions and can trust the financial services in which they have invested.
'That's why we believe that there must be additional checks and balances introduced to the legislation in addition to the impartial guidance that will be available.
'With more of us than ever before saving in private pensions, this is too important to leave to chance. We believe, if implemented, our eight point plan would give people the added security and reassurance they need to know that they are making the most of their hard earned savings.'