Is the regulator trying to put the pension freedom’s genie back in the bottle? The interim retirement options paper frets about a falling away in the annuities market and inertia in terms of consumers ending up in what might loosely called drawdown by default by not changing provider.
The regulator bemoans a lack of innovation in terms of products pondering why the market has not come up with some sort of partial guarantee/drawdown cross which is interesting a week after Met Life pulled out of the third way annuity market citing the inflation environment.
Half of pots accessed early have been withdrawn altogether with suggestions that some customers simply don’t trust pensions and wanted to place their money in the bank where it’s safe. Oh dear!
One solution suggested – albeit rather tentatively – is better default products – the regulator is circumspect about whether this should be enforced by government, regulator or just brought in by the industry. Of course this would be using a default product to make sure people don’t simply default into something they don't want. All rather confusing.
If these are significant problems they were created and driven through by HM Treasury not by the FCA.
Whether the FCA is now trying to play catch up far too late is one matter, but maybe we should have required a minimum income provision. Some advisers have advocated this approach but surely that would potentially encourage another bolt for the freedom doors? Those genies can be elusive.
One thing for advisers to ponder - if the default includes a price cap then it might impact on the broader advised drawdown market.
Elsewhere, the CII publishes a new pension transfer qualification updated to take into account the latest FCA thinking.
“In reality, ‘passive' investing is anything but as it leads investors to place increasingly disproportionate amounts of capital within an ever narrower universe,” says M&G's David Jane in the latest salvo in the passive and active wars.
Rose and North founder Hayley North says advisers must ignore politics when it comes to investing. Don’t quite agree but I know what she means.
CWC Research’s managing director Clive Waller asks why wealth managers have mostly been ignored in the final Asset Management Review report of the FCA. He wants greater transparency enforced. He believes the future belongs to restricted advisers but also that they have dodged a bullet on charging for now.
Sifa’s managing director David Ingram outlines some SIFA members’ four approaches to developing better professional connections.
Philip Hammond believes that the generous pensions mean public sector workers are not paid significantly less than their private sector counterparts even after the austerity years. They may well be around 10% ahead. He clearly didn’t expect a cabinet colleague to leak these comments probably as part of Brexit discussions. Surely this is a sacking offence? Maybe not in these fractious times.
Still, at least it’s one way to get people talking about pensions.