Adrian Boulding: empowering the individual retiree

We’re starting from a point where one in three consumers don’t bother to even look beyond their current insurer. The new compulsory code ensures customers receive clear and consistent information that puts them in a position to shop around for the best annuity rate.

But the big win isn’t about getting everyone a slightly better rate – although I’m sure those extra few pounds a week of income will be welcome. It’s about shape; because not only are customers going to be given the necessary information to go shopping, they will also be encouraged to think about what sort of shape they want their pension to come in.

Success is when we get consumers making well thought through decisions about whether they are going to take a single-life pension or also be providing for a spouse or partner that might survive them. I don’t want any more: “I’ve told her indoors that she’ll be well looked after, and I won’t be around when she finds out it’ll only be by the state.”

Choosing a level or escalating pension also needs some careful consideration, taking into account other income streams like savings – which may be depleting – and the state pension, which now provides ‘triple lock’ inflation proofing.

Employers have a critical role to play in facilitating these decisions. They almost always know when an employee is coming up to retirement, and are well placed to encourage them to start thinking about these choices in good time.

Large employers will have an in-house team that can give information to employees, and may arrange pre-retirement seminars. Medium-sized employers often have an independent financial adviser that makes site visits, and could be directed to spend a little time talking to those coming up to retirement. Even the smallest employers can do something, perhaps directing the employee to the Money Advice Service, which is refocusing its efforts on stages such as coming up to retirement.

So whatever their size, employers need to step up to the plate and follow the ABI’s lead in helping people make better decisions at the point of retirement.

Adrian Boulding is pensions strategy director at Legal & General