Pensioners lack awareness about upcoming pension reforms

Apparently not enough has been done by pension providers to keep people up to date about upcoming retirement changes in the UK on April 6. A pension is the income that retired people receive.

A PwC report revealed that only 36% of 50-75 year olds have been contacted by their pension providers about the the new retirement options that will be available, indicating that providers should be more proactive in reaching out to clients about their options.

Those with lower amounts of wealth and smaller pension pots were less likely to have been contacted by their providers about the changes.

Less than a third contacted

Only 26% of people with household wealth of less than £300,000 and a pension pot of under £40,000 have been contacted by their provider.

New pension freedoms on April 6 will allow consumers to withdraw their pension savings rather than buy an annuity. An annuity, as occurs in a pension plan, provides a regular stream of payments made out monthly or annually, either for the rest of the person’s life or fox a fixed period.

Huge inflow of customer requests

Jonathan Howe, Head of Insurance at PwC, said:

“Many pension providers are concerned about a huge inflow of customer requests come April 6th and these figures suggest their fears are well-founded with nearly half of respondents naming their providers as a source of information they intend to tap in to.

“With less than 40% of people believing they’ve been contacted by their insurer regarding the new pension rules, insurers need to do much more than they have to date in providing information to their customers.”

He added:

“A key factor in determining the providers who will come out as winners post April 6th will be those who have invested considerably in consumer research and direct to consumer channels, which will enable them to design and deliver a superior experience for their customers,”

The package of pension reforms

Chancellor George Osborne said in his fifth Budget speech that “no one will have to buy an annuity” in the future.

He told the House of Commons: “Tax rules around these pensions suggest pensioners can’t be trusted with their own pension pots. I reject this view.”

Adding:

“We’re going to introduce a new guarantee, enforced by law, that everyone who retires on these defined contribution pensions will be offered free, impartial, face-to-face advice on how to get the most from the choices they will now have.”

“Those who still want the certainty of an annuity, as many will, will be able to shop around for the best deal. I am providing £20m over the next two years to work with consumer groups and industry to develop this new right to advice.”

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