Personal Pension  

Webb plan for provider push-back could ‘undermine’ freedoms

Webb plan for provider push-back could ‘undermine’ freedoms

A “careful balancing act is required” to make sure that providers are not undermining the overall objectives of the new pension freedoms, Aegon has said in response to Steve Webb’s push for providers to be given more leeway to question client decisions post-April.

In an interview with FTAdviser, published yesterday (21 January), Steve Webb revealed he is pushing the regulator to allow providers to push back on clients they believe may be making poor decisions when new pension freedoms come into force from April.

In response Steven Cameron, Aegon’s regulatory strategy director, said that providers ‘checking’ that people are doing the right thing with their money could undermine the overall objective which is focused on “ensuring people make confident, informed decisions”.

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He said: “We welcome the pension flexibilities and don’t want to see a situation whereby providers challenge people who have made up their mind on how to take their income after careful thought having used the Pension Wise service or seen an adviser.

“A careful balancing act is required as we want people to make confident, informed decisions and excessive ‘checking’ could undermine this objective.”

Mr Cameron did, however, agree with the minister that providers could play a role as a ‘second line of defence’ by asking “constructive” questions and pointing to further information.

He said: “Pension providers can potentially help as a final checkpoint to ensure people understand their decision. Rather than challenging them or asking intrusive questions, we should ensure people know what their decision entails.

“For example, if someone wants to take all their pension as cash, we might say: ‘You’ve asked to take your full fund in cash It’s important you think about your ongoing income needs and the fact that average life expectancy for a 65 year old today is around 20 years.’”

“There’s a lot of loose talk about ‘second lines of defence’. We need to make sure the customer isn’t left thinking we’re trying to defend against them getting access to their money.”

Earlier this month, Labour peers again voiced concerns over pension freedoms and called for a ‘second line of defence’ for pension savers at the point of sale of an at-retirement income product, to protect people from scams and pensions ‘liberation’.

While broadly welcomed, pension freedom and choice reforms have come under scrutiny amid claims they will make life easier for unregulated pension liberators, who will no longer even be forced to set up as a pension scheme when savers are able to access their cash legally.