People have more protection when buying a washing machine than they have with their pension provision, the shadow pensions minister has said.
Speaking at FTAdviser’s Retirement Freedom Forum event in Birmingham, Angela Rayner told a packed room of advisers she had been “shocked” by the “big gaping holes in pensions protection”, in terms of education, expectations and eventual outcomes.
Ms Rayner cited her early career as a healthcare worker, when she first found out what pensions were, as an eye-opener, and said far more needed to be done to get people in the UK not only saving for retirement but to be secure in it.
“I believe the former coalition and now the current Government have not got it right. The manner in which they have implemented pension reforms without proper consultation, and the lack of evidence-based policymaking, is not helping people plan for their future”, she said.
While she hailed auto-enrolment as a relative success, she argued the Government was still not doing enough with regards to educating people on drawdown, pension freedoms and changes to the state pension.
Delegates heard more was needed to “communicate pensions policies and changes in a simple way, making the public aware of what they can really expect in retirement”.
She said: “A lack of clarity undermines moves to make people save into pensions.”
Ms Rayner cited recent Government figures that showed nearly 40 per cent of the baby-boomer generation had not even started to make any personal savings towards their pension.
She said: “Pension freedom is not necessarily a bad thing”, she told attendees, and added: “The principle of adding choice is a good thing, but I believe it was a dereliction of duty for the Government to announce these changes with so little consultation, without addressing management costs and without talking to practitioners such as yourselves.”
She also said 45 minutes-worth of discussion with industry-paid-for guidance service Pension Wise was not enough, and would go nowhere towards closing the gap.
This point was picked up on by one of the delegates, Chris Flower, senior financial planner of Opus Investment Management, who asked: “Could the Government make it clearer to people in the public sector what is the full value of their remuneration package? Surely if they had a full, transparent statement they would have better understanding and feel empowered?”
Another adviser, Jeff Burn IFA of Grape Benefits, made the point that when Pension Freedom came in, Pension Wise was created at great cost – and advisers bore some of the fees.
He said: “Why does the Government feel it has to set this up when there are professional, trained, skilled people who can give advice?”
She answered: “You are right, Government should use the intellect represented in this room and across the UK and it should listen to the industry.