The government has today published its response to the Work and Pensions select committee report which looked at pension freedoms.
Andrew Tully, Pensions Technical Director, Canada Life comments: ‘Hopefully the idea around developing default retirement pathways can now be kicked into the long grass. While defaults can work when building up savings, trying to design one single solution or default when consumers are looking to generate a retirement income is virtually impossible. A single default pathway would run the risk of being unsuitable for more people than it helped.
‘As the government has recognised, people have hugely varying financial needs in retirement, more often than not with multiple pension pots and often with a mix of final salary and individual savings. Designing default decumulation pathways to cope with people’s hugely varying needs in retirement would essentially mean having multiple different defaults which kind of defeats the objective.
‘A single guidance body with much more work to encourage many more people to take independent advice, especially those using income drawdown, supported by a single, mandatory pensions dashboard, will support people in making the right decisions as they plan their retirement.
‘It will be interesting to see how this government response to the select committee report ties up with the FCA’s final report from their retirement outcomes review which is due to be published shortly.’