The Government should follow A-Day pension simplification with an ‘R-Day', or Retirement Day, rethink to encourage finding the best value for money from accumulated pension pots, according to pensions provider Living Time.
The provider believes an R-Day simplification to replace current secured and unsecured pension rules would encourage people to consider carefully the choices they make at retirement.
Living Time says simplification would lead people to consider a wider range of factors including their investment risk attitude, the danger of inflation eroding fixed benefits, their own personal circumstances and their own or spouse’s health.
Kim Lerche-Thomsen, chief executive of Living Time, says: “The UK has two sets of rules mainly for historical rather than practical reasons and it is debateable whether this divide is helping consumers make better decisions.
“The rules introduced at A-Day do encourage people to save more money into their pensions and allow those with company money purchase arrangements to shop around for their retirement income product. But how much of this extra benefit will be lost by people failing to seek out the best deals when they reach retirement?
“R-Day could focus people’s minds on the enormity of the decision they face, encouraging them to make more informed decisions while also enabling the industry to develop a host of new and innovative products without many of the current constraints that are stifling the market.”
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