Opinion  

Pension debate must go beyond the industry

Jon Cudby

I like pensions. I suspect if you’re reading this, you have a passing interest too. I don’t want to burst any bubbles this early in the week, but I suspect we might be in the minority.

Most people aren’t that bothered. The frenzied response to the overhaul of retirement announced earlier this year has, I’m afraid, not been replicated around the watercoolers of Britain.

And why should it be when the industry itself seems no nearer deciding what the new landscape will look like? There is huge uncertainty surrounding where retirement will go from here, so it is welcome that Nest has taken it upon itself to start a conversation, unveiling a consultation on ‘The future of retirement’.

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There are many interesting proposals in the document, but more important is the fact it is looking to promote an informed debate.

True, it has taken eight months since the Budget to get here and there are only just over four months until the new rules kick in, but the document Nest has put together could not have been knocked up in days and the auto-enrolment specialist should be commended for trying to spark some from of discussion.

By its own admission, it is in a fortunate position when it comes to being able to enjoy a bit more time. Its newness means any of its members retiring in the next few years will not have sufficient funds with Nest to face any major issue. This is likely to be true at least until the ban on transfers is lifted in 2017.

Even if there may not be time for others to get much in place for April 2015, the evolution of pensions is going to be ongoing, along with this debate. We will not lurch from one set of rules to the other on 6 April, and then stay there.

And this is a debate that needs to be had, which will benefit the entire industry. But most providers responded to George Osborne’s announcements by scurrying off to work on new products or salvage what they can of the old ones, understandable given the short timeframes allowed.

As well as stepping up to start people talking, Nest has provided plenty to talk about; the consultation paper is punctuated throughout by good ideas.

Longevity insurance, for instance, which sounds like a viable solution to the problem of increasing life expectancy. Although it might need rebranding if it is not going to mark pensions out even more as a minefield rendered impenetrable by its over-reliance on jargon.

What is most striking within are the details of research that Nest has carried out about the public’s attitude to – and requirements of – pensions.

It identifies a changing need, as people have started to retire in instalments, moving gradually to part-time work and reducing hours slowly before stopping completely. This trend is established and will continue, but retirement income providers have not yet done anything innovative to reflect it.