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08 Oct 2014

Pensions Minister: ‘Decade Of Innovation´ For Pensions

Pensions minister Steve Webb recently stated that the pensions and retirement industry is facing a “decade of innovation,” starting with the changes due to take place next April, Money Marketing reports.

As of April 2015, those aged 55 and over will be able to access their pension funds in full; providers are expected to follow up by launching a host of new retirement income products.

Speaking at the Liberal Democrat conference in Glasgow, Webb said that he will watch the industry “like a hawk” as it develops in line with the new freedoms.

“While it is difficult to regulate products that don´t yet exist, I am clear that as a Liberal Democrat we must […] step in if necessary to make sure we do not have a repeat of some of the past horror stories for which the pensions industry has unfortunately become all too well known,” he stated.

However, he indicated that the regulation of these products should not be too “heavy-handed”, as individuals will be making decisions for themselves; but that consumer protection should still be an important focus.

During the keynote speech, Webb also assured that he would introduce the automatic escalation of pension contributions in the next parliament, on an ‘opt out´ basis, meaning that a higher percentage of employees´ wages would go into their pension pots.

For Jeff Salway, member of the Financial Services Consumer Panel, rather than products, most of this innovation is likely to come in the form of online advice:

“The UK industry has been quite slow […] to develop these type of services but it is starting to happen in advice now. There could be an advice decision tree online as a low cost advice service, so that is where most innovation will come in the next few years.”

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