Pensions, Universal Credit and other payment rates from April 2022
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The pensions and retirement landscape never stands still, and yet more changes have appeared on the horizon as 2022 begins. Jon Greer, head of retirement policy at Quilter, discussed some of the adjustments that are set to take place this year in the world of pensions.
The headline is regulatory changes which will mean pension providers have to take more responsibility for keeping their customers well informed.
Mr Greer said: “A year can’t go by without further changes to pensions legislation and 2022 will be no different.
“We’ll see the introduction in June of providers ‘nudging’ customers more forcefully towards guidance services at the point they take pensions benefits and on certain transfers.”
These new regulations are set to kick in from June 2022, and will help to ensure savers have all the information they need before making a decision regarding their pension.
The changes mean that when an individual wishes to access their private pension savings for the first time, their provider will be required to:
• Refer their customers to Pension Wise guidance
• Explain the nature and purpose of the guidance Pension Wise provides
• Offer to book an appointment with Pension Wise on behalf of their customers in most cases, or alternatively provide customers with the information needed to book their own appointment
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Pension Wise is a service which provides free help and guidance to over 50s in the UK regarding their pensions.
It is backed by the Government, and offers 45-minute guidance sessions to anyone who wants to learn more about their retirement savings.
At present, pension providers are only required to tell their customers about Pension Wise if they are looking to draw money from a defined contribution pension plan.
Mr Greer continued: “Any attempts to drive up the take up of guidance should be seen as a positive development as it’s what people ‘don’t know they don’t know’ that creates retirement pitfalls.
“One side effect of greater guidance take-up we hope to see is a subsequent increase in those taking regulated advice.”
Along with increased guidance for consumers looking to draw their pension, there’s expected to be a shift towards giving savers more information about the sustainability of different investment options.
Mr Greer explained: “Spurred on by the UN Climate Change Conference (COP26), sustainability continues to be a key focus across the Government and industry.
“The Financial Conduct Authority’s (FCA) proposed sustainable investment labelling regime will likely see further progress this year, and it could have a positive impact on the ways in which people choose to invest their pensions.”
The goal of sustainable investment labelling is to provide more transparency for savers about where their money is being invested.
There are also further regulatory initiatives underway which could become more of a factor this year in helping people plot their path to a healthy pension pot.
Among the ones to watch is the ‘Pensions Consumer Journey’ initiative, which seeks to understand consumer behaviour at key points in the pension saving journey, and therefore improve people’s ability to save towards retirement.
The FCA says this will involve “identifying the best points at which to offer savers support, who is best placed to provide that support, and how this can be done”.
They are also exploring ways to improve outcomes for people in non-workplace pensions.
Mr Greer said this will include helping customers to “choose investments that meet their needs and warn those with sustained and potentially inappropriate levels of cash about the risk of their cash savings being eroded by inflation.”
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