John Cridland, independent reviewer of the state pension age, has slated past attempts to increase savers' engagement with their retirement income.
During a panel debate on people taking responsibility for their own retirement at the Association of British Insurers Long-term savings conference in London today (4 July), Mr Cridland said too many attempts in the past had been focussed on delivering information about pension products.
Reflecting on the recommendation in his state pension age review paper on the need for a mid-life MOT to encourage people to plough more cash into retirement savings, Mr Cridland said the regulator and industry needed to stop delivering information and instead focus on explaining lifestyle choices to savers and the impact on their finances.
Ms Cridland said: “With the midlife MOT I was trying to set out that financial information or guidance people need isn’t about financial judgements. They are lifestyle choices.
“The big lifestyle choices that people need to take to see the financial consequences. Most of what has been built historically has been information based. We need to be bolder.”
Responding to a question from the audience on should there be automatic guidance or advice given to pension savers, Lesley Titcomb, chief executive of The Pensions Regulator, said automatic enrolment had been a success because it relied on inertia.
With the creation of the pensions dashboard, which will show savers the variety of pots they have saved into, Ms Titcomb said the industry and regulators need to figure out when to best engage people and show this information.
She said all the studies done in days of the Financial Services Authority showed it is life events that are the best times of engage people – like the birth of a first child.
In March 2017 the government announced that The Pension Advisory Service (Tpas) and Pension Wise would be merged to create a single pensions guidance body.
Statistics published by the Financial Conduct Authority last week revealed the shockingly low take-up of government guidance services.
In the regulator’s 48-page Financial Advice Market Review Baseline report, the FCA stated of those aged over 55 plus and planning to retire in the next two years, less than half (44 per cent) had used at least one form of guidance or information.
However the FCA revealed only 10 per cent had used (TPAS) and only 7 per cent used Pension Wise.
During the question and answer session after his speech, FTAdviser and Financial Adviser’s editor Emma Ann Hughes raised the fact that new secretary of state for work and pensions David Gauke had kicked off the ABI's conference, taking place in London today (4 July), by wrongly describing what the guidance services offered.
Mr Gauke acknowledged his mistake in calling the guidance services an “advice body”, pointed out he had been a regulatory lawyer and was aware of the importance of words and added he was aware of the difference between guidance and advice.