Is this the answer to pension freedom without the pain?

This is Money Podcast

This is Money

Business News, Business, Investing, News

4.1 • 650 Ratings

🗓️ 17 January 2021

⏱️ 47 minutes

🔗️ Recording | iTunes | RSS

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Summary

More than five years since pension freedom arrived a solution to take the pain out of investing in retirement is being lined up.

Before pension freedom many savers were locked into buying an annuity with their personal pensions or defined contribution work schemes – and a lot of them felt they were getting a raw deal.

That’s meant that keeping a pension invested and drawing on it as you choose in retirement has proved a very popular option. It is also a very tricky one to navigate – but now some simple help is at hand, so will it crack the conundrum of pension freedom without the pain?

Tumbling annuity rates, an industry that failed to make sure people shopped around and the gamble on life expectancy that meant if you died early then you and your family would lose out, made annuities hugely unpopular.

So, Chancellor George Osborne came up with a big bang approach that meant nobody had to if they didn’t want to anymore. The problem is that many people had simply opted for a ‘pay money into my pension while working and not think about it’ approach and so had no real idea how to invest for retirement.

Now the industry has come up with a solution that involves savers being offered four ready-made investment deals when they first dip into their pension pots, if they do so without financial advice.

On this week’s podcast George Frost, Tanya Jefferies and Simon Lambert, discuss whether this is the answer that savers need.

They also look at the tsunami of pension and investment scams, what people can do to protect themselves and ask whether it’s the FCA or Google and the social media companies that should be doing more to crack down on it.

Simon outlines his theory on why just as we are about to be able to get out and enjoy ourselves again, some big ticket inflation might hit.

And the team look at another Santander 123 account rate cut – is it time for customers to finally give up, or is it a deal still worth having?

Transcript

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0:00.0	Welcome to This Is Money podcast. I'm Georgie Frost and alongside me and editor Simon Lambert. Today is Pensions and Investment Editor Tanya Jeffries. And coming up, saving our collective retirements from the scammers and from ourselves. New simple ways to invest and draw on our pensions are to be offered to save us as pandemic pension fraud reaches an industrial scale.
0:22.8	Tanya lays out what you can do to protect your future. Also, you'd be mad to book a holiday
0:27.5	abroad this year, so surely anyone who is brave enough could bag themselves a real barking.
0:34.2	Think again, says Simon. Are we about to see a burst of big ticket inflation?
0:39.1	And one, two, three cuts to Santander's popular current account in a year. Is it still worth
0:45.8	it? Don't forget you to stop today. With all the latest breaking money news, just go to this ismoney.com.
0:50.0	UK or download the app. But first, changes are being made to the way that we access our pension
0:56.3	pots, basically, to stop us messing it up. Pension firms will soon be offering the over 55s for
1:02.1	simple, ready-made investment deals for when they first dip into their retirement fund if they
1:07.5	aren't paying for financial advice first. Now, regulators have ordered that providers
1:11.6	take these measures, which will be launched on the 1st of February, because they're worried
1:15.5	that inexperienced investors are making poor decisions. Tanya, what's happening? Well, the regulators
1:23.2	are worried about what people are doing with their pension pots. Pension freedoms obviously gave people
1:28.9	a lot of control over what they do. But most people who save retirement through a work pension
1:34.7	just simply go in the default fund. The rule of thumb is it's 90% of us do that. And they don't
1:40.5	make any investment decisions. They're not used to it. Unless they are used to
1:44.4	investing, they are literally from a standing start from age 55, making a whole host of
1:50.5	important decisions with a significant amount of money, which they've had absolutely no background
1:56.5	before in dealing with. And the regulators have been monitoring this
2:00.9	ever since the pension freedoms were launched in 2015.
2:04.3	And it came up with some worrying findings.
2:07.1	And it's given a lot of thought to this.
	...

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