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Queen's Speech: Fidelity slams volume of pension legislation
by James Phillipps on Jun 04, 2014 at 14:40
Fidelity has slammed the volume of pension legislation being pushed through parliament at the moment, warning it risks consumer detriment, while Bestinvest has branded the push for collective pension funds ‘double Dutch’.
This follows the Queen’s Speech in which the monarch confirmed a third Pensions Bill, which will legislate for collective defined contribution (DC) schemes as part of the radical overhaul of the retirement market.
Collective DC schemes, or ‘Dutch pensions’, provide greater clarity on what income an individual will receive in retirement and are said to have around a third higher payouts than standard DC schemes.
While supporting the broader aims of increasing flexibility for consumers around pension and post-retirement planning, Fidelity’s head of retirement insight Alan Higham believes the sheer amount of change being enacted is ‘confusing’ consumers and known problems should be addressed first before new types of arrangements are introduced.
‘Today’s announcement of a third Pensions Bill in this parliament to legislate for collective DC schemes is badly timed and will further dilute resources that need to be applied to help people retiring today,’ he said.
'We would like to call for a pause within parliament from issuing more significant pension changes whilst we digest what’s on our plate now. Customers we speak to are totally confused by their choices which leads to paralysis of action which benefits few. Industry is inundated with demands from regulators and politicians whilst being asked to innovate.’
Higham pointed out that the industry is still waiting to hear the findings of the FCA’s detailed supervisory review of the at-retirement market and greater clarity is needed on how annuity pricing will be regulated ahead of forced annuitisation being abolished next April.
'People will have more choice than ever from April 2015,’ he said. ‘We need to prioritise fixing the known issues before then rather than legislating for schemes that no one wants nor needs at this moment.’
But Standard Life calls for further reform
However, Standard Life has called for further reform and is calling on the government to ‘review and consider’ its three key proposals.
These are the removal of all barriers to pension savers accessing flexible pension options, a scrapping of the upper age limit for DC schemes and increased employer tax breaks to fund employee guidance on options.
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