Scores of financial advisers flocked to the plush May Fair Hotel in London on 2 March for the FTAdviser Retirement Freedoms Forum, one year on since the advent of the changes.
While the groundbreaking freedoms at retirement have been heralded as a boon to the advisory sector, disappointing annuity rates and faltering drawdown plans amid heightened market volatility has left many advisers scratching their heads over the best income option for pensioners.
The annual forums are designed to equip advisers with information to prepare them for future challenges facing their clients’ pension pots as well as providing insight from some of the industry’s leading figures.
First up to the lectern was Yvonne Braun, the Association of British Insurers’ director of long-term savings policy, who explored ways ahead for insurers post-pension freedoms.
Ms Braun reaffirmed the trade body’s preference for the introduction of flat-rate tax relief on pension contributions as opposed to the pension Isas alternative, ahead of big changes to pension tax relief that were expected in the 16 March Budget.
She also called for the pensions equivalent of a mid-life health check, to ensure people are saving enough for retirement, and heralded the concept of a ‘pensions dashboard’ where savers can view their pension pots across providers and schemes in one place.
The highlight of the session arguably came from the Q&A session, which followed her presentation. Advisers quizzed Ms Braun on why the trade body had not taken action against members over pension exit fees.
Ted Shaw, an adviser at East Sussex-based EJ Financial Limited, said he had a client who wanted to get their pension cash, but faced a market value adjustment of 35 per cent, even though the individual was only six months away from retirement age.
In response, Ms Braun recommended that advisers flag unacceptable exit charges with the FCA.
She said: “A lot of the structures that we have used in the past were devised by very clever actuaries with the best of intentions, but were not very well understood by the general public. That is not good.”
She added: “The key product now is the auto-enrolment pension, which is very plain and vanilla, charge-capped, and governed by an independent governance committee.
“We are in a much better place in terms of trust, but it hasn’t fed through yet in terms of perception as we are still dealing with all the exit fee issues that have come up last year and are being dealt with now, as well as all the structure issues. That is still ongoing.”
The next keynote speaker, pensions minister Baroness Ros Altmann, revisited the topic, stating the Government was aiming to clamp down on ‘unfair’ exit charges, and explored the role of technology in streamlining and driving down the cost of advice.
She also revisited the Government’s plans for tougher regulation on master trusts amid concerns that the current approach could be putting savers’ retirement funds at risk.
