ANALYSIS
NEWS
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THE INVESTOR
RETIREMENT
PENSIONS REVOLUTION GATHERS MOMENTUM
Britain’s pensions revolution is gathering pace, with a series of reforms aimed at allowing
greater flexibility in taking retirement benefits alongside the proposed introduction of new
workplace pension schemes to encourage people to save more towards their retirement.
The aim of all these changes is clear: the government wants to encourage everyone to
save as much as possible towards what is becoming a long period of retirement, so it has
recently introduced two new initiatives.
First, and most important, the scrapping of rules which effectively forced most
pensioners to buy an annuity to fund their retirement: this means that no pensioners will
be locked into fixed income products which, because their returns vary according to
long-term interest rates, can be perceived, by some people, as poor value, despite the
lifetime security they provide. Instead, they will be allowed to take their benefits in a way
that suits them, making it easier to adapt their pension savings to the kind of phased
retirement or part-time working that is becoming more common.
Second, the reforms aim to persuade more employees that it is worth joining
workplace pension schemes with new Dutch-style collective, defined ambition schemes.
The workplace scheme proposals face a tough credibility test in the UK but, in general,
the reforms are a welcome recognition of the importance of retirement planning.The
government hopes that those saving for retirement will find the prospect of more options
and greater flexibility enticing, but only if, when coupled with the right advice and
planning, they make a comfortable retirement a reality.
Turn to ‘The Flexible Tools’ on page 12 to read more about how changes
to pension rules are increasing opportunities for savers
