Personal Pension  

FCA must ensure pension savers are informed

Pensions expert Alan Higham has called on the FCA to ensure people make informed choices about their pension.

The retirement director at Fidelity, and founder of Milton Keynes-based Retirement Angels, said the City watchdog should step in to make sure advisers are explaining the options thoroughly to their customers rather than leaving them to it.

He said: “I do think the FCA could start to do more in the area of safety-net checks as a form of evidence that customers have made informed choices.

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“Hitherto it has been about giving customers booklets and reams of paper.

“If the FCA doesn’t step in, hoping the industry will change itself is wishful thinking. But it is not a bad thing to be seen to be good.”

Mr Higham was speaking at the launch of a report by the Pensions Policy Institute which showed four in 10 pensioners faced “significant risks” around accessing their pension savings.

And while he said the guidance guarantee included in the new pension freedoms was a brilliant idea, he warned against seeing it as a lifeguard who could save everybody.

The analysis by the PPI found around 12 per cent of the population will be at “high risk” of making poor decisions when they reach state pension age if they are not offered support.

The research shows these are people with defined-contribution savings between £19,400 and £51,300 at retirement, but who have no additional defined-benefit pension to fall back on.

Daniela Silcock, senior policy researcher at the PPI and the report’s author, said: “Decisions about accessing defined-contribution savings are very complicated and difficult for people to make without asking, and it will become more complicated after the new flexibilities are brought in.

“There is a conception among people that they don’t understand pensions, and that is backed up by the evidence.”

Adviser view

Roger Kuhlmann, an adviser with North Yorkshire-based Storrs Wealth Planning, said: “I think my clients will be informed about their choices if they come to me.

“Some of my clients are waiting until April, when there will be absolute clarity over the rules. It is definitely a danger that people will go without advice.”