📋 Tender Overview
Nearly five years on from their introduction further reforms and safeguards are needed to ensure the long-term sustainability of the pension freedoms according to an ABI report published today. There are concerns that if the current rate at which many people are typically withdrawing cash from their pension pots continues then future pensioners will be at risk of running out of money in retirement.The reports key recommendations include steps to tackle advice and guidance black holes schemes giving mandatory risk warnings if people ask for transfers out of final salary schemes later life financial reviews and banning unregulated investments.Five years on future-proofing the freedoms looks at the impact of the pension freedoms since their introduction in April 2015 including how many people have used the greater pensions flexibility how the risks have been handled and what further action is needed to deal with the problems that still persist.Huw Evans ABI Director General stressed thatHuw Evans ABI Director GeneralThe jury is still out on the success of the pension freedoms. We will only be able to judge their true impact decades from now once it is clear whether those who have exercised their choices have the retirement that they were hoping for.The pension freedoms have revolutionised retirement finances giving people greater flexibility with their pensions including being able to take all or part of their pension pot as cash buy an annuity to provide a guaranteed lifetime income or to drawdown an income from the pension while it remains invested. So far over 30 billion has been accessed from pension pots with latest figures1. showing that in 20189 alone over 350000 pension pots were fully withdrawn.But the changes have also placed much greater responsibility on savers to ensure that they make the retirement choices that are right for them. Further reforms and safeguards are needed as too many people are making complex and vital retirement decisions without help. According to FCA data in 201819 nearly half -48 - of people who accessed their pension pots did so without regulated advice or guidance.Many of the current generation of retirees benefit from final salary pensions which provide a guaranteed retirement income while they use other pension monies flexibly. But final salary pension schemes are in decline and future generations will increasingly rely on pension savings without such guarantees. This makes it vital that they can access guidance and advice to help them make such decisions.
