The regulator’s 122-page Retirement Outcomes Review: Interim Report made me start to wonder if I was living a less entertaining version of the Bill Murray movie Groundhog Day.
Unlike before pension freedoms, the bulk of savers now opt for drawdown rather than annuities – my sense of deja vu was immense as the Association of British Insurers data told me that ages ago.
The paper also told me that just like before then chancellor George Osborne threw open the Pandora’s Box that is pension freedoms and allowed people to do whatever they want with their retirement savings, most people still just stick with their pension provider and don’t bother to shop around for anything better.
So a load of cash has been spent by the regulator to tell us what we already knew – savers just stick with what they know because they don’t know any better and most people don’t value pensions and just want to grab the cash now that they can do so.
The regulator isn’t too alarmed at this point by this behaviour but has proposed ways to make sure people trust pensions and don’t end up impoverished in retirement.
These proposals amount to developing more comparison tools (nothing wrong with that), pushing guidance services and considering whether there needs to be a return to default retirement income options.
What is really needed isn’t more research but for the regulator to recognise what is needed is more advisers and for savers to be pushed towards you and your services.
What consumers need is to receive a statement from their pension provider with this phrase in 28-point bold capital letters: “You could have hundreds more pounds in your pocket if you shop around for an annuity or drawdown.”
At the bottom of the statement, the provider should be forced to list financial advisers in the saver's area and/or a simple comparison of how much extra retirement income someone could muster if they shopped around.
That would force providers to up their game and not simply rely on the fact many people still believe they are rewarded by providers for being loyal and sticking with them.
Rather than waste yet more cash on gathering information everyone in the industry already knows, the FCA could instead spend your money on an advertising campaign stating, “Want more money in retirement? Don’t stick with your pension provider. Ask an adviser to help you shop around for the best deal.”
They could use the fantastic piece of research published by the International Longevity Centre and Royal London, which found those who received financial advice between 2001 and 2007 accumulated significantly more liquid financial assets and pension wealth than those who didn’t by 2012 to 2014.