Partnership chief executive Steve Groves has warned the UK will face an “annuity apartheid” unless policymakers and the financial services industry move to tackle the advice gap for people with small pension pots.
The International Longevity Centre published a report last week which exposed the potential negative impact the RDR will have on people with “modest” pensions worth less than £40,000.
Speaking at an ILC debate in the House of Lords, Groves (pictured) said an unintended consequence of the RDR will be to exclude people with small pots from accessing financial advice.
He said: “We are facing an annuity apartheid following the RDR. If something is not done today then we will end up in a situation where only the most wealthy will be able to shop around when they reach retirement.
“Consumers with modest incomes will struggle with the concept of paying a fee for financial advice and as a result will be more likely to miss out when they eventually buy an annuity.”
He pointed to Partnership research which suggests people missed out on £7bn of retirement income between 2000 and 2009 as a result of failing to shop around.