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Press comment: Pension freedoms a success, but some shortcomings


If you’re covering the ABI’s report on five years since the introduction of pension freedoms please see the following comment from Jon Greer, head of retirement policy at Quilter:

Jon Greer"Pension freedom reforms represented the biggest shake-up of the UK’s savings and investment industry in a generation. Retirement plans have changed dramatically, with most people now choosing flexible retirement funding, instead of being confined to a rigid regular income from an annuity.

"The reforms were in part a response to a time of low interest rates, which suppressed annuity rates in the middle of a decade that had been kind to investors. It meant that those reaching retirement were being forced to take a meagre annuity yield and watch on longingly as investors enjoyed the fruits of a stock market boom.

"It encouraged a trend in retirement that had already started; retirement no longer means simply winding down and adopting a gentler pace of life. Many people want to travel, develop new hobbies or explore interests which they haven’t had time to indulge during their working lives. And some people choose to phase into retirement, gradually reducing their hours or moving into work they find more rewarding but which may be lower paid. Pension freedoms have enabled some people to build an income plan that helps them fulfil their own lifestyle choices, instead of making their lifestyle fit around their annual annuity income.

"But despite the success of the reforms, they have not been without their shortcomings. The FCA has found that non-advised customers in particular are at risk of making choices that may not serve them well in the long-run. Around one in three non-advised pots are invested wholly in cash, which over time will be eaten away by inflation. And 94% of non-advised customers have taken the drawdown plan offered by their existing provider, whereas advised customers are much more likely to shop around for the best pension company to meet their needs.

"Looking forward, it can be argued that pension freedoms are still in their infancy. Five years may feel a long time in the ministerial merry-go round of Westminster, especially since we have had three Prime Ministers and as many elections during the short time that freedoms have been in force. But it is vital to continue to monitor retirement behaviours closely to ensure freedoms work for customers. For instance, stock markets have delivered broadly strong returns over the last decade, rewarding retirees that have kept their pot invested in flexi-access drawdown. But if global investment markets were to fall substantially - and history tells us they surely will at some point - retirees will need to be in properly balanced portfolios with appropriate risk controls in place to avoid drastic losses that will be compounded by income withdrawals.

"Similarly, although a lot of work has been done to protect vulnerable customers and restrict the prevalence of pension scams, they will not go away. Steps to ban cold calling and increase awareness of the risk of scams are welcome but tackling pension scams will be a constant battle that we need to keep fighting. 

"A clause in the Pensions Schemes Bill currently going through Parliament paves the way to enable schemes to block a transfer where they suspect it is an attempt to defraud the customer. This is an important weapon for the pensions industry in tackling scams, however it is taking time to implement and we will only get the necessary regulation once the Pension Bill becomes an act. It is crucial that these additional protections continue to be re-enforced by ongoing awareness campaigns to ensure that customers are alert to the signs of a fraud."

For more information contact

Kathleen Gallagher023 8072 629307990
Michael Glenister020 7778 963807469

Notes to Editors:

About Quilter plc:

Quilter plc is a leading wealth management business in the UK and internationally, helping to create prosperity for the generations of today and tomorrow.

Quilter plc oversees £95.3 billion in customer investments (as at 31 March 2020).

It has an adviser and customer offering spanning: financial advice; investment platforms; multi-asset investment solutions; and discretionary fund management.

The business is comprised of two segments: Advice and Wealth Management and Wealth Platforms.

Advice and Wealth Management encompasses the financial advice business, Quilter Financial Planning; the discretionary fund management business, Quilter Cheviot; and Quilter Investors, the Multi-asset investment solutions business.

Wealth Platforms includes Old Mutual Wealth UK platform and Quilter International, including AAM Advisory in Singapore.

The Old Mutual Wealth Heritage life assurance business was acquired by ReAssure Group Plc on 2 January 2020.

Since its IPO in June 2018, Quilter plc’s businesses have progressively rebranded to Quilter, as follows: 

  • Quilter Financial Planning (previously Intrinsic)
  • Quilter Private Client Advisers (previously Old Mutual Wealth Private Client Advisers)
  • Quilter Financial Advisers (previously Charles Derby Group)
  • Quilter Financial Adviser School
  • Quilter Cheviot
  • Quilter Investors
  • Old Mutual Wealth (becoming Quilter Investment Platform)
  • Quilter International (previously Old Mutual International)

This press release is for journalists only and should not be relied upon by financial advisers or customers.

Please remember that past performance is not a guide to future performance. The value of investments and the income from them can go down as well as up and investors may not get back any of the amount originally invested. Exchange rate changes may cause the value of overseas investments to rise or fall.

This communication is issued by Quilter plc.  Registered office: Millennium Bridge House, 2 Lambeth Hill, London EC4V 4AJ, United Kingdom. Registered number: 6404270.  Registered in England.