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18 December 2015

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Don’t leave savers’ futures to chance, says NEST

In its response to the Treasury and FCA’s Financial Advice Market Review, NEST is calling for a combination of simpler advice and guidance and well-governed retirement products to help members get the most from their retirement savings.

NEST chair of trustees Otto Thoresen said:
‘People who’ve saved all their lives deserve to get the most out of their pension pots in retirement. That includes making the most of the new flexibilities offered by Freedom and Choice.

‘We welcome the government’s desire to encourage new forms of simpler advice and guidance at retirement. This will support more people to make active decisions at such a critical point in their lives. But we also know that many still won’t feel confident making decisions and a large proportion of savers may not engage with advice at all. Evidence from our consultation on the future of retirement suggests this may particularly apply to savers who’ve been auto enrolled into pensions through their workplace.  

‘As a Trustee we take our legal duty to look after members’ interests just as seriously when they come to take their money out of NEST as when they’re saving for retirement with us. To ensure good outcomes for our members, we believe we need to be able to signpost them to well-governed products that meet a broad range of needs. NEST’s Retirement Blueprint sets out how such products could give members the benefit of flexibility, access to cash and later life protection without requiring them to actively manage their account over the course of their retirement, which we know many may find too difficult. Leaving their futures to chance is simply not good enough.’

Helen Dean, chief executive said:
‘We support the Freedom and Choice reforms and we want to work with government to find ways of making them work for everyone. There seems to be growing consensus that the advice gap at retirement can best be bridged by a combination of simpler advice and well-governed, flexible products. Now we want to work with government and industry to help make that vision a reality.’

Key points from NEST’s response:

NEST is keen to work with government and industry to ensure that members reaching retirement have access to suitable forms of guidance and advice, as well as to products that meet their needs. We would encourage government to:

  • continue to develop the quality and tailoring of free guidance provided by Pension Wise, and to widen the scope of the guidance to cover interactions between pension saving, debt and benefits; as well as encouraging cross-industry collaboration to develop better, more engaging tools and service for consumers, that can underpin guidance services like Pension Wise – like a pensions dashboard
  • take steps to encourage industry to deliver simpler advice and guidance services, and provide them with the necessary assurances to encourage them to take them to market
  • support industry to develop products that are suitable for a broad range of consumers, and are suitable for signposting via simpler forms of advice and guidance; and over time, consider regulating or certifying those products to provide reliable retirement pathways clearer for consumers.