Pension product innovation is key, says minister

Speaking at a private event in London on Monday 20 January, sponsored by Scottish Widows, the MP said that product innovation was key to helping more people engage with pensions.

Mr Webb added: “I am not convinced, for example, that current annuity products are the right answer for most people. Obviously we need to split the ‘how’ from the ‘when’ and focus on how we are going to do this. But the biggest issue is that people get a good deal.

“I spoke with a big insurer a few days after I commented on whether to introduce switchable annuities – a case of thinking out loud – and the provider said: ‘What can we do to help?’ Part of my role is to identify the answers.”

Article continues after advert

On Tuesday the department of health issued a statement of intent on social care funding after Norman Lamb, minister of state for care and support, promoted Care Bill reforms that would mean greater collaboration to develop products suited to long-term care funding for the elderly.

The DoH statement confirmed that the government and the Association of British Insurers would work together to innovate on products. Clare Bousfield, chief financial officer for Aegon UK, said: “There will be growing demand for solutions that allow customers the flexibility to take different levels of income throughout retirement, reflecting their changing needs.”

Janet Davies, joint managing director of care fees advisory network Symponia, said: “The development of newer, suitable products that fit the new system will get a resounding ‘yes’ from every care fees planning financial adviser in the country. However it is imperative that providers consult with those advisers with experience of immediate needs annuities and pre-funded knowledge.”