Information needed to plug the knowledge gap

Information needed to plug the knowledge gap

There is a huge opportunity for advisers to fill the knowledge gap as most people do not understand the pension reforms, Aegon UK managing director for retail Duncan Jarrett has said.

He said: “With customers facing overwhelming and complex decisions about their savings at retirement, advice has never been so important. It is only by allowing people to see the range of options and how it relates to their savings, that they will be able to make informed decisions with their adviser.”

According to an Aegon consumer survey, which surveyed 540 customers in February, 65 per cent of people do not understand the reforms and those who do would need support selecting the right combination of income products.

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The provider has launched online portal, Your Retirement Planner, to help advisers explain the range of options and guide clients through the new flexibilities.

It provides an interactive income planning tool, which responds to the information people provide on their savings and shows what it could convert to in drawdown, a guaranteed product, annuity or cash lump sums depending on the mix of options chosen.

Designed to complement Pension Wise, it will help customers manage their income through Aegon’s platform, which was designed for decumulation, and savings through Aegon Retirement Choices.

Advisers can use it to show the implications of different options – such as taking a large percentage of savings in drawdown each year, which could mean customers outlive their savings, or how taking a large lump sum could push them into a higher tax bracket.

Adviser View

Phil Casey, partner at Oxford-based Focus Independent Financial Advisers, said: “We’re investing a lot of thinking about the best way to explain retirement income options, such as flexible drawdown, to clients.

“Any tools that illustrate how savings can be turned into income and explain the risks and considerations will prove useful. We’ve been using Aegon Retirement Choices and believe one of its main strengths is the ability to move from accumulation into decumulation. The addition of the income tool will prove helpful in explaining this process to clients.”