From the blog: With the introduction of the pension freedoms in April 2015, employees were given far greater flexibility to draw down their pension pot.
But, despite it being nearly a year since the freedoms, many people are still unaware of just how their options have broadened.
Together with these changes we have also seen a growth in the mastertrust market, with over 70 providers operating today.
As schemes and businesses continue to incorporate this evolving landscape into their offerings, here are some priorities for the pension market in 2016.
Making pension freedoms a reality
As the industry emerges from the pensions revolution that was 2015, there will undoubtedly be a proliferation of new products and services aimed at facilitating choice. Both employers and trustees play a key role in helping members understand and access these freedoms.
That said, just 8 per cent of pension funds are targeting drawdown as their default investment strategy, despite its popularity with members.
In light of this, employers and trustees need to engage proactively with their employees to help them make informed retirement choices rather than uninformed, irrevocable decisions that later come back to haunt them.
Settling the mastertrust market
This year we will start to see the mastertrust market splitting into two camps: serious players and those that are unlikely to make it in the long term.
There are concerns that there is little consistency across the market in terms of outcomes and standards. If we see compulsory mastertrust assurance framework or Pension Quality Mark Ready accreditations announced by the Pensions Regulator, then this will really help separate the wheat from the chaff, highlighting the credible providers who place robust governance at the heart of their offerings.
Cutting through the complexity
Many people feel uninformed about pensions and the government’s 2015 reforms. We know people want to understand their finances better, so companies and trustees should jump on any chance to get people talking about saving for retirement.
By cutting through the complexity, making schemes as user-friendly as possible, and keeping communication high on the agenda, employers can help employees understand and get more involved with the decisions they need to make around their long-term financial planning.
Fiona Matthews is managing director of LifeSight by Willis Towers Watson
