This week brought news of post-retirement offerings from two major master trusts, as the industry attempts to solve a particularly vexing problem. Pensions Expert’s Nick Reeve, meanwhile, is worrying about trousers.
My nearly-three-year-old nephews have a new phrase in their ever-growing lexicon: “I do it myself.”
This usually pertains to things like climbing into their car seats, making lunch, or getting dressed in the morning.
As anyone with experience of toddlers will know, however, the difference between confidence and competence can be quite stark. After several minutes of trying to get the right number of limbs in trouser legs (which limbs is often a different challenge entirely), a forlorn cry of “help!” will drift across the bedroom.
Putting on trousers can be a tricky task when you’re yet to fully master fine motor skills and hand-eye co-ordination.
Speaking of complex tasks, I’ve been thinking about retirement income this week. I can imagine the job of turning a pension pot into a retirement income might seem straightforward to many people at first, but they may quickly change their minds.
After attempting to grapple with the different types of annuity, drawdown rates, investment options and tax implications, many of those people may also find themselves forlornly crying for help. And that’s before they’ve even tried guessing how long they are going to live.
Fortunately, help is coming. The Pension Schemes Bill introduced a requirement for defined contribution pension schemes to provide members with default retirement pathways. This means a member’s pension will start paying out when they reach retirement age without the immediate need for them to make a massively complex and irreversible decision for which they may be unprepared.
Some are already working on their offerings. TPT Retirement Solutions launched its retirement income proposition this week, designed to provide a sustainable income stream until age 95 or until the member decides to buy their own annuity.
Nest, meanwhile, is working on an innovative approach involving a drawdown option and bulk annuity purchases to protect cohorts of older members against longevity risk.
Nest to tap into bulk annuity market to support post-retirement proposition
The UK’s biggest defined contribution master trust plans to enter the bulk annuity market as part of its new post-retirement proposition, which will also include the addition of a flexible drawdown facility – something Nest has been lobbying for over the past few years. Read more
These services, and the others that will doubtless emerge over the next few years, are the equivalent of having your pension trousers put on for you, potentially before you even realised it was time to get dressed.
I have supreme confidence that, by the time they come to consider their retirement, my nephews will be experts in putting on their trousers themselves. I also hope that, for them and the rest of us, our retirement income options will soon be as straightforward and stress-free as putting on trousers is for us grown-ups.
Now, where did I put my belt…?
Nick Reeve is editor of Pensions Expert.
This editorial initially appeared in Pensions Expert’s Friday Takeaway email, summarising the biggest news of the week and the latest appointments. To sign up, please register for free.
