Concerns that the upcoming RDR will limit access to advice for people with small pension pots has prompted Partnership to appeal for help to tackle the issue.
Concerns that the upcoming RDR will limit access to advice for people with small pension pots has prompted enhanced annuity specialist, Partnership, to appeal to trade associations, financial advisers & the Government in an effort to help tackle the issue.
Research conducted by Partnership indicated that less than half of annuitants who have shopped for a retirement product know what an annuity is and that 75 per cent of those who chose an enhanced annuity did so because it was recommended by a financial adviser. Furthermore, Partnership has warned the RDR will make it too expensive for most IFAs to service such clients with small pension funds.
Partnership’s Managing Director of Retirement, Andrew Megson, said: “The UK is facing a retirement crisis, yet the FSA’s proposals may play a significant unintended role in stopping less wealthy pensioners from maximising their retirement income in old age.”
He added that the RDR will cause “significant consumer harm” unless people with small pension pots can access independent financial advice. “We fully support the principles underpinning the RDR but there will be significantly reduced numbers of experienced financial advisers to guide customers on their annuity options.”
In light of this, Sesame says policymakers should undertake a detailed review of the implications on people with small pension pots. Executive chairman Ivan Martin said: “It is vital we face up to the repercussions of the RDR implementation and specifically the significant number of experienced advisers leaving our industry.
“We must work together to find a way around any negative effects of leavers so that pensioners with small funds, as well as those who suffer from ill-health, are not disadvantaged by the changes.
“A detailed review of the implications is essential to assess all the risks. We are fully supportive of this campaign.”
Hargreaves Lansdown’s Pension Investment Manager, Laith Khalaf, said: “Partnership has produced some interesting analysis but I do not think it is clear cut that the RDR will deprive people with small pension pots of advice. The Treasury is already investigating ways to encourage more people to shop around, by possibly even making it the default option, which I think is a more productive strategy in getting people to look at enhanced annuities.”