L&G urges government to launch regulated guidance market to plug advice gap

In light of the appointment of Chloe Smith as secretary of state for work and pensions, and a new pensions minister to be announced shortly, Colin Clarke, head of product policy strategy, workplace savings at L&G , has outlined how the government can improve the status of retirement savings in the UK and ensure that a balance is found between short-term decisions that impact long-term financial well-being.

He said due to regulatory restrictions currently in place, pension providers were unable to prod, prod or alert clients to options that might offer them better retirement solutions. “Currently, this is seen as advice. Unless there is fundamental reform of the legislative and regulatory framework around advice, engagement will remain low, ill-informed decisions will continue to be made, and people will continue to sleepwalk into retirement.” .

Clarke added: “Closing the counseling gap is important work at the best of times, but in the context of the cost of living crisis, it is critical now.”

L&G also highlighted the importance of continued support for consumers to increase pension adequacy.

He said the pension landscape could be overwhelming for consumers. “While we recognize participation levels and consequently pension adequacy in retirement might not be at the top of the list of priorities, given the current climate, it is important that we have an action plan to implement the auto-enrollment reforms proposed by the government to give providers, employers and members a clear timeline to prepare. Auto-enrollment has been a huge success and it’s important that momentum be maintained with cross-party support.”

Clarke added that despite ongoing changes in Downing Street in recent years, there were relatively good levels of political consensus when it came to pensions and retirement savings. “Therefore, a focus on pension adequacy initiatives such as the mid-life MOT and phased timelines for auto-enrollment and panel pensions should progress. Cutting and changing policy now will leave consumers confused at a when they need to make informed decisions.

DC schemes are starting to invest in productive assets that benefit the UK economy and wider society, but have yet to scale to the levels needed to make a difference, according to Legal & General.

These assets have traditionally been available through private markets, but current legislation significantly limits the opportunity for CD schemes to invest at significant levels.

Clarke welcomes the recent consultations to understand and address these limitations and calls on the government to keep up the momentum and provide a framework that makes it easy for trustees to maximize this opportunity for their members.

He said: “In the current context, ‘value for money’ is crucial, but it is a broad term that must consider long-term benefits to members, including net return on investment. Democratizing productive finance will be key.” to level the UK.”

Clarke added that the new cabinet would have a long list of priorities to work on, none greater than the current cost of living crisis. “It is therefore crucial that the new pensions minister ensures that a balance is found between the short-term decisions consumers have to make in response to rising costs of living and the need for long-term financial well-being.”

He concluded: “We call on the government to close the advice gap, ensure continuity of support to help pension adequacy and democratize investments. These three factors have always been important, but in the context of the rising cost of are now critical to improving the status of retirement savings in the UK”.

Since the Retail Distribution Review (RDR) was implemented in 2012, many people are unable to receive the kind of advice they want and need.

Fewer than one in six people follow advice, according to online advice service OpenMoney. She says many consumers are unaware of the benefits of seeking advice and how and where to find it.

This has created a situation that many in the industry have called the ‘advice gap’, referring to people who want financial advice but cannot afford it.’

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