View more on these topics

Cass Business School warns Govt on ‘reckless’ pension reforms

Report says decumulation product is needed

The Government’s “reckless” pension reforms risk exposing thousands of retirees to running out of money in their old age as it is “impossible” for individuals to manage longevity risk, the Cass Business School warns.

In a report published earlier this week, Cass Business School’s Pensions Institute director David Blake calls for a decumulation product to be developed to avoid a fallout from the radical changes to pension taxation announced in the Budget.

Blake says: “In his bid to offer freedom of choice, the Chancellor fails to recognise the key risks associated with every pension scheme.

“The optimal running down of assets in retirement is extremely complex. A minority of individuals might be able to manage some of these risks on their own, but this is a risky and high-cost strategy.

“The Chancellor must understand that it is impossible for an individual to manage longevity risk, except in extreme cases of terminal illness.” 

The report says individuals tend to significantly underestimate their life expectancy, with men outliving their pension pot by an average of five years and women by an average of three years.


Blake says there is a need to move away from retail decumulation products, such as individual drawdown and retail annuities.

He says: “It is essential that the decumulation stage of a defined contribution scheme is institutionalised in the same way that auto-enrolment has institutionalised the accumulation stage, rescuing pension savers from the high-charges and poor investment strategies of retail personal pensions.

“Similarly, economies of scale need to be exploited in the decumulation phase to enable good value drawdown products to be designed for the early stage of retirement and good value annuities to be designed for the later stage.”

Blake is chairing a taskforce that will devise proposals to “prevent the risk of retirement rip offs” and “ensure everyone can have access to retirement products that helps them secure a stable retirement income”.


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm