Latest research by Xafinity Paymaster, part of the Equiniti Group, shows that over 82% of annuity providers and industry experts believe that the Government needs to take a leading role in addressing the unintentional negative impact that RDR will have on those with small pension pots, the poorest, and people in poor health.
The survey was carried out by the leading pensions administrator, amongst top annuity providers and industry experts, representing all sectors of the market across the UK.
A respondent commented:
“I think this has always been a danger that those with lower levels of wealth are disenfranchised as a result of RDR and yet have the most to gain from advice in terms of maximising the value of their, albeit smaller, levels of investment.”
Similarly, the majority of the industry (86%) said that the RDR implementation will lead to an industry based around execution-only business with industry experts believing that an increase of internet-based information provision will lead to a decrease in intermediary sales.
An expert added:
“It does not automatically follow that customers will be disadvantaged as long as the information / guided sale encourages customers to consider all options and ensure they are able to access the most appropriate product for their individual circumstances.”
The same research showed that experts are split 50/50 over a need for regulation to be introduced that would make the Open Market Option mandatory, with 45% agreeing and 45% disagreeing, while the remaining 10% are undecided.
Responses to the survey included:
“Forcing people to use the OMO is one thing, but helping them do this is another. We first need to consider how we streamline the process of customers for customers to use their OMO.”
“Compulsion is the only means of navigating this - look at the saving position.”
David Sinclair, Assistant Director, Policy and Communications, International Longevity Centre - UK (ILC-UK), commented:
“The impending regulatory environment for financial advice (RDR) may result in an ‘advice gap’ where the poorest and least well-off pensioners will fail to receive critical financial advice. ILC-UK continues to believe this may result in consumer detriment for those who arguably are in the most need of support.
Brian Please, Business Development, Insurance & Payments, Xafinity Paymaster added:
“Every year, including 2012, the Xafinity Paymaster Annuity Survey has highlighted the fundamental issue of access to suitable, cost-effective advice for those reaching retirement with smaller pension pots.
“With the impending introduction of RDR, the issues with annuity advice, or lack thereof, unites almost all experts leading to a call for Government intervention.”
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