Many people feel as though they struggle to gain access to sound pensions advice. What are the reasons for this and what can be done to help?
A recent pensions study conducted by YouGov for law firm Burges Salmon revealed that 45% of people find good pension advice hard to access. It also stated that 58% don’t believe their workplace pension is enough to see them through retirement and that 67% don’t understand pension products. Clearly, there is a great deal of disillusionment amongst the public in respect of their pensions; but what exactly can be done to make them feel more at ease? Here we examine improvements that could be made in order to build up client confidence when it comes to pension advice.
The research conducted during the study found that many consumers don’t actually understand pension products and the options available to them. This indicates that more needs to be done in terms of the public’s level of financial education. The report goes on to suggest that online tools such as pension dashboards could be useful in terms of providing a visual analysis to clients. However, Lawrence Churchill, chairman of the Pension Protection Fund, believes that financial guidance is the key. He states that ‘for guidance to work, we need to simplify the system.’
It seems, therefore, that financial advisers and employers need to be having wider conversations with their clients and employees to ensure that advisers fully understand what they're discussing with clients, and clients understand exactly what they’re signing up for.
Avoiding unregulated firms
The pension experts quoted in the report believe that pension advice from regulated firms is generally quite good. However, bad advice and pension scams often stem from unregulated firms. The question is, why isn’t there more awareness regarding advice from such organisations? The report states that 80% of financial advisers don’t believe that the FCA and The Pensions Regulator is doing enough to raise awareness of the risks involved when seeking advice from unregulated firms. One suggestion is that the government should be creating a number of campaigns highlighting this issue in order that consumers become savvier when it comes to receiving pension advice.
Last year, the Pensions Administration Standards Association (PASA) revealed that over £1 billion has been lost to pension scams - a major issue that needs to be tackled to prevent savers from unnecessarily losing further funds.
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