2. Simple guidance to be developed for withdrawing funds through UFPLS or IDD. This ‘rule of thumb’ guidance needs to be designed to counter known biases such as attitude to risk and longevity.
3. More interestingly, the FCA is beginning to articulate what its mooted ‘at-retirement communications review’ might produce. The Wake Up Pack is ruled to be too long, difficult to navigate and full of jargon. Something much more accessible needs to be developed in the crucial last few years before retirement. We argue that the pre-retirement conversation needs to start much earlier, even 10 years before retirement, and providers as well as advisers should be supporting consumers on a gradual journey of exploring options, adjusting portfolios if necessary, and weighing up at-retirement options. It needs to be an interactive process and it should be supported by online tools which help consumers explore different scenarios.
To this end, the most eye-catching proposal that the FCA comes forward through in the MS14/3.2 is the Pensions Dashboard. This is the idea, which has been discussed many times across the industry, of bringing about a single view of all pension pots in one place - perhaps including a DB and DC scheme, anticipated state pension and Isa investments.
The Dashboard is clearly a great idea if we can work out a way to fund it and put adequate infosecurity around the relevant data feeds. Again it needs to be simple to understand and offer opportunities to explore different options so that consumers can see the positive impact of putting more in.
With all this change going on providers must be looking forward to the Christmas break more than usual but we also suspect they won’t have much time to dally after the festivities are over. Happy Christmas.
Natanje Holt is managing director of retirement market software provider Dunstan Thomas
