As we get older we don’t trust our memories as much, so we also become more at the mercy of scammers who can trick us by concocting and playing back ‘false memories’ with a view to taking money from us.
That’s before we get into the grim issue of cognitive decline which is becoming a big problem with our ageing population. One in six people over the age of 80 have dementia, amounting to 850,000 sufferers in the UK today. These numbers will more than double to reach 2m by 2051. 225,000 will develop dementia this year alone.
The industry is already looking for ways of safeguarding the growing army of the aged. The ABI teamed up with BIBA to publish a Vulnerable Customer Code last month which brokers and pension providers alike are signing up to.
It’s vital we face up to this challenge, as one of the well-documented facts about age-related cognitive impairment is, while the ability to do even simple sums diminishes with age, many older people don’t realise they are getting the sums wrong.
Dashboard
One of the themes that comes through in the DP is the need to get all the information about all potential sources of retirement income in one place so in-retirement planning can be made easier.
With this in mind the concept of the Pensions Dashboard (more commonly trumpeted as a way of coping with legacy AE pensions as many of those being auto enrolled today will have many more jobs in their lifetime than the last generation, and therefore will accumulate many more relevantly small AE pension pots), is also championed as a great way for the over 65s to get to grips with what exactly they have got to draw on in retirement.
There is also some discussion in the paper of the totally disinterested being pushed into default policies that are in the long-term interests of the member. There will be a need for strong independent governance here with kite-marking of simple drawdown products against strict quality criteria, for example.
There is also clear need for people to properly understand ‘longevity risk’ as they are now bearing that risk themselves rather than passing it to an insurance company by purchasing an annuity.
Research shows we underestimate when we are going to die – on average – by two years for men and four years for women. But more importantly, few people have a good grasp of the probability distribution of them living to various ages. Yet somehow they have to cater for this spread!
