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NEST calls for pre-set retirement options to protect savers in retirement

Published: 02 November 2017

NEST (National Employment Savings Trust) has today responded to the Work and Pensions Select Committee’s inquiry on pension freedoms, providing evidence that advice and guidance alone will not meet the needs of millions of savers approaching and entering retirement. 
 
NEST’s evidence calls for a simple solution:  pre-set retirement options that meet high minimum standards of governance. These would extend Trustee oversight for members who don’t opt out, helping them get the most out of their pension savings for the rest of their lives. 

The scheme is concerned that without these options in place, their members face multiple risks including paying too much tax, being scammed, paying higher costs or spending too little or too much in their retirement. 

NEST, with over 5 million members and thousands of retirees, also found that most of their members either haven’t thought about what they’ll do when they get to retirement, or simply expect NEST to pay them an income at that point.
 
This highlights a disconnect between savers’ expectations and the reality of having to make ongoing, complicated decisions throughout retirement with little support. 

Chief Customer Officer at NEST, Gavin Perera-Betts said,
 
“We welcome this inquiry, which will shed further light on how to improve the retirement prospects of UK workers. 
 
“We believe there’s a risk that, without action now, we’re setting up a generation of savers for failure. 
 
“We don’t need to look too far for the answer. Auto enrolment has worked extremely well and can be a model for where to go from here. No one is tied in, savers are free to make their own choices, but most of the hard work is done for them. 
 
“We think that’s what’s needed in retirement too. Qualifying workplace pension schemes, which have a fiduciary duty to their members, should be expected to offer a straight-through solution from saving through to taking an income, so anyone who doesn’t want to shop around doesn’t end up worse off. 
 
“We want strong default options in place to complement a thriving and competitive advice market. We believe that’s the way to avoid the next pensions miss-selling scandal and give millions of savers peace of mind in old age."