This is a massive year for pension provision with over 30,000 firms needing to auto-enrol and the Budget announcement about pension liberalisation.
The biggest debate arising from the Budget is on what at-retirement advice or guidance should look like and who should provide it.
Another consequence of the Budget is the quickest new-product launches ever seen, with one-year annuity products from those seeing a considerable decline in traditional business. These short-term products need to be considered carefully because the annuity payment is low.
Taxation mitigation alongside provision of income for life is one of the biggest planning issues at retirement. Will the traditional pension providers who are currently muttering about offering at-retirement guidance, many by telephone, really provide personal taxation advice to those who fear they do not have enough money to retire on?
Since Capita says that among those already auto-enrolled only one in five thinks they will have enough money to retire on in comfort, I think not.
Will the regulators and politicians allow providers to offer this guidance? If so, I hope they are required to strongly advise the client to see a financial adviser because the choice of how to take retirement income is one of the most important decisions taken in life.
As we are four months away from the Scottish independence referendum, the Scottish at-retirement population needs to be aware that Office for National Statistics figures show that Scotland has the lowest life expectancy in the UK. According to the Scottish government, a 65-year-old woman entitled to a total pension of £160 a week could expect to get around £11,000 less in Scotland than her counterparts in the rest of the UK. The figure for men is £10,000.
Speaking of longevity, I hope that Royal London lives long and prospers as it rebrands Scottish Life and Scottish Provident. All of its attention needs to be on pensions and protection provision in the right balance because while all attention is on pensions, the starting point of financial planning – that is, protection provision – is taking a hammering.
Swiss Re reports both good and bad news: for the first time, over 2 million people are insured in long-term disability income schemes offered by their employers; but term sales are down by over 17 per cent, critical illness by 21 per cent and income protection by a quarter, year-on-year.
The Government should be applauded for making workplace pensions compulsory but what is the point of having a well-funded pension if you die in your late thirties leaving three children and stay-at-home mum with no life cover? Life and pension providers should be forced to help clients find financial advisers to get personal advice for life, not just at retirement.
Kim North (firstname.lastname@example.org) is managing director of Technology and Technical