Each month we ask leading industry figures to answer one big question
What New Year’s resolution do you feel the retirement planning industry should make and why?
*Editor’s note. We received so many responses to this question that we are unable to show them all. To avoid disappointment, the remaining responses will be printed in the next issue of Retirement Planner
Gerry Brown is tax and trusts manager at Prudential
International mobility is a feature of 21st century life. However, there has been a dearth of mobility in the thought processes of those charged with developing a tax system to cope with the retirement planning needs of the European Union’s citizenry. The retiring Europhile is faced with varying succession issues, tax issues in relation to income tax, capital gains tax, wealth tax and inheritance tax. On top of this, the structure and taxation of pension arrangements varies dramatically from country to country.
Is it too much to hope that in 2010 the financial planning industry will recognise this problem and resolve to lobby for harmonisation?
Bob Bullivant is CEO of Annuity Direct
The FSA cracks down on life company systems and controls and the training of their staff which breeches TCF. Customers are paying to have their pension arrangements administered by life companies whose administration is appalling. They regularly give incorrect information and forms and create delays in processing the most basic of queries. Delays can mean that annuity rates are lost and the life company attitude is we have our ‘standard turnaround times’.
Unless the FSA really sort this out clients will be paying twice post RDR – once for life company failures and once for the IFA to sort out the issues. This is not TCF and is currently a major obstacle to RDR implementation.
Peter Carter is head of product marketing at MetLife UK
In 2010 we should resolve to focus on simplifying the tax system. Simplification would make saving easier to understand and that in turn would increase the amount people saved as they would understand the issues more clearly.
Simplifying the tax system would benefit the savings industry directly. It would mean lower costs which we could pass directly to our customers through cheaper products. That would increase sales. Increased saving in turn would mean increased funds available for investment in industry throughout the UK.
Rob Childs is head of operations for pensions & actuarial services at DST Global Solutions
The industry needs to work hard on deploying electronic tools and functionality designed to help consumers make informed decisions about retirement choices.
Within the advised middle market it is important to recognise the internet is making consumers more self aware. As an industry we need to understand these behaviours and dynamics so that we can make the necessary information and tool sets available to help enable advisers give full advice in this area. Their customers will then be confident in knowing they fully understand their choices.
So my New Year’s resolution is to make major efforts to put tools and technologies in place designed to promote informed choice when converting pension funds into income. This way we can help the industry strive towards a future where consumers invest with confidence in the right product, supported by a clear rationale and explanation.
Tony Collins is chief executive at OPAL
Over the past few years wraps have become an established part of most advisers’ planning tools and continue to grow in popularity.
Wraps have proved to be invaluable in the broader market, but currently they are primarily designed for more sophisticated clients with more complex needs.
However, they are equally valid for clients with more modest financial needs – subject to a simplified structure and cost effective pricing.
I believe there is an opportunity for a ‘mini-wrap’, a simplified version of the full service wraps that offer the same basic functionality, but with a restricted range of asset classes to match the risk reward profile of the average RDR investor.
Janet Davies is joint founder and managing director of Symponia
It will be difficult to produce any one-size-fits-all solution this side of the General Election and possibly for several months after, but it would be really refreshing to see some of the major product investment providers researching their involvement in the care fees planning arena.
Advisers too, need to face the subject with renewed enthusiasm and a duty of care. Mention the words long term care and you can watch their eyes glaze over immediately.
We know the old-style long term care insurance products weren’t popular and for the most part no longer exist, but just because there isn’t an off-the-peg solution doesn’t mean that the subject can’t be discussed.
Steve Hunt is managing director at Rockingham Retirement
TCF. 65% of people get no advice and the 35% that do often get poor advice. These are often irrevocable decisions customers are making, affecting possibly a quarter of their entire life! As an industry we owe it to everyone going into retirement to make an informed decision and make a decision that is not only right for them but for their families too.
John Jory is deputy chief executive at B&CE Benefit Schemes
I believe we should be aiming to persuade the Government to take the issue of means testing much more seriously. This is such a big issue and needs to have adequate focus sooner rather than later. The danger if it does not is that it could mean a significant number of people will choose to opt-out of saving for retirement. We need to be encouraging people to start saving as early as possible in their working lives towards retirement as we know the state pension simply will not be enough to rely upon. To this end, getting a large number of people who currently don’t to save for their retirement to start saving is an enormous prize we should grasp with both hands.
Jon King is managing director of Hodge Lifetime
2008 saw the Government engage in the debate over equity release and its place in the retirement planning process. But it was only a beginning and as an industry we should resolve to push harder to get this topic up the political agenda.
This shouldn’t be too difficult as elections often bring out views in areas which previously have been avoided. The relationship between equity release and benefits is central to this debate and ultimately is why Government should engage with the industry.
Carl Lamb is managing director at Almary Green Investments
My suggestion would be to make communication with the client clearer. We need greater transparency in terms of costs and projected annuity levels. Clients should be able to get a clear understanding of where they are today in terms of achieving their retirement aspirations, so that they can take action to keep things on track. The changes in the market have seriously devalued many pension pots, and clients need to know what impact this has had and to understand the potentially serious implications of doing nothing about it.
Steve Lowe is marketing director at Living Time
To improve the lives of millions of pensioners by giving them access to £billions of pounds improved benefits over their retirement by scrapping the Open Market Option and replacing it with a new Pension Passport enabling those approaching retirement to shop around (preferably with the benefit of a financial adviser) across the many retirement income solutions now available in the market.
Billy McKay is marketing director at AJ Bell
I think the resolutions that can make a difference have to come from the people in power. The pension simplification changes are becoming a distant memory but did set out with the aim “to increase individual choice and flexibility and reduce administrative burdens, thereby making it easier and more efficient to save in pensions”.
If we are to help breed confidence and reinvigorate interest in pensions and savings, we must have a stable environment. The recent changes to the already complex anti-forestalling rules provide a good example of added complexity. If, as a policy maker, you are concerned about the level of tax relief why not reduce the annual allowance? That would seem a simple solution, but the spirit of simplicity has been lost.
Tom McPhail is interim chairman of the Pension Income Choice Association
The retirement planning industry’s New Year resolution should be to make the open market option the default course of action for all money purchase pension investors. Instead of flogging investors uncompetitive and in some cases downright inappropriate products, the retirement industry should reward the savers who have placed such trust in them over the years. The challenge for the retirement planning industry, when the festivities are over and the rocky road of 2010 lies ahead, is to make sure that it looks after its customers as well as its shareholders. 2010 should be the year that pensions income choice becomes the default for all investors, not just the minority.
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