Technology, policy and regulation is radically shaping the pensions and long-term savings market, according to Yvonne Braun, director of long-term saving policy at the Association of British Insurers.
Since the pension freedom and choice regime came in, she told Emma Ann Hughes, editor of FTAdviser, that the ABI believes providers have been doing enough to make sure consumers can get access to their cash.
Ms Braun said: “Absolutely. This has been an enormous project for the industry, in terms of the preparation for it, doing this with not much time at all, and in terms of dealing with the increased customer demand for clarity on their various options and so on.
“Hundreds of millions of pounds have been invested.”
The ABI is set to publish statistics shortly this year, looking at the market one year on, and analysing what has happened since April 2015, when the pension freedoms came in.
She said: “As expected, the initial rush for cash has slowed down. People have been buying more drawdown products than annuities, but people are still buying annuities so this market is not dead. I think providers are doing enough - and doing a good job, not just enough.”
Another policy change has been the announcement of the new Lifetime Isa - the Lisa - in the Budget on 16 March.
Ms Braun said the ABI would be watching how the new Lifetime Isa will affect the world of long-term saving and pensions.
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She said: “The test of the success of the policy really is how it will interact with auto-enrolment. Will it lead to an overall increase in retirement savings, or will it mean people stop saving into a workplace pension and direct their money into a Lisa?
“This I think would be a problem given that we have made such a fantastic start with AE, with 6m new savers enrolled into workplace pensions.
“While it is important to save for a house, the fundamentals have not changed - life expectancy is still going up and people still have to save for retirement so we will be watching very closely to see how the Lisa unfolds.”
The ABI’s position is still that people in the workplace will be benefited more by saving into a workplace pension, given the employer’s contribution into the scheme.
Ms Braun also said how important it was for the government and industry to work together to deliver long-term savings policies and projects.
Ms Braun will discussing these developments along with other key issues at the ABI’s Transforming Long Term Savings Conference on 19 April. Click here for more details about the conference.
