The People’s Pension has announced it is also working on a retirement default option, after Smart Pension revealed today (15 May) details about their guided pathway.
The provider is the second biggest master trust in the country, with almost four million members.
Roy Porter, director at The People’s Pension, argued there is “clear need for a guided pathway in retirement for savers” and that the scheme is working on the details of its own product design.
He said: “When faced with what can be a daunting and often complex array of options, currently many retirees simply cash in their pensions as early as possible.
“They risk being hit by a hefty tax bill, missing out on investment growth and critically running out of retirement income if they live longer than planned.”
The scheme didn’t disclose any more details about their new product.
Smart Pension announced today that it is working with Legal & General (L&G) on what could be the first default retirement pathway in the UK market, using robo-advice.
The master trust, with almost half a million members, has joined the pension provider – one of its shareholders – to create a product combining drawdown and annuities.
The pathway will also have two other pots – one for inheritance tax and a rainy-day fund.
Paul Budgen, director of business development at Smart Pension, told FTAdviser the project is now in the development phase, with a launch expected for the first quarter of 2019.
The new product comes after MPs called for a new form of standardised drawdown to protect pension savers, and that providers should be forced to offer the product.
The government-backed provider National Employment Savings Trust (Nest) has been supporting default retirement options since 2016.
However, current rules don't allow for master trusts to develop such a product.
Default decumulation options were also proposed by the Financial Conduct Authority in its Retirement Outcomes Interim Review out in July 2017.
maria.espadinha@ft.com
