In the immediate aftermath of the rollout of pension freedoms, the overwhelming sense was that providers were not ready. The tight timeframe in which to prepare, combined with the scale of the reform, was a plausible (if not defensible) reason for the delays customers were experiencing.
But as time goes on, it is emerging that the challenges posed by pension freedoms are not simply due to the April deadline. The issues the industry is grappling with are deep-seated ones – legacy systems, tired business models – and it is doubtful another six months, or even an extra year’s grace, would have been enough to fix these.
Four months in, and some analysts have already made up their mind as to which providers are best placed to capitalise on pension freedoms, and which are likely to fall by the wayside.
Life companies have an opportunity in the pension reforms to shrug off this notion that they are sluggish and slow to evolve. Some firms are clearly failing to seize this moment.
As this week’s comprehensive research by Money Marketing pensions reporter Sam Brodbeck shows, there is a “yes, but…” mentality emerging when it comes to providers granting access to pension pots. “Yes you can draw down your cash, but you have to transfer to our platform,” or “Yes, but you have to move into a different product.”
Providers will argue they are facilitating the freedoms as best they can. But the illusion of savers being able to access their cash in a manner of their choosing has been shattered by the reality. This is against a backdrop of complex positions on non-advised drawdown and death benefits, which is compounded by poor service levels and bad client communication. The knock-on effect of all of this will only hurt advisers on the frontline, who will have to bear the brunt of savers’ frustration who in some cases did not even want to see an adviser in the first place.
The winners of the shake-up to pensions will be those firms that can deliver continuity of service and efficient access to cash, while evolving their model to deliver income in a volatile environment. But with changes to tax relief looming on the horizon, and the likely hit to contribution levels, it is predicted that the pensions industry could see asset flows drop by up to 30 per cent as a result. The so-called winners should not be resting on their laurels.
Natalie Holt is editor of Money Marketing – follow her on Twitter here