Forum Brief: Planning for old age

Financial firms and consumers need to adopt a more pro-active approach to planning for old age, according to a new report by the Financial Services Authority.

The report argues that the ageing population brings major opportunities and risks for firms, while for consumers the choices they make both during their working life and at retirement make a big difference to their financial well being.

Forum Response: Association of British Insurers

Alan Woods, head of life and pensions at the ABI, told ePolitix.com: "Britain needs a wake up call to save more for the future. The FSA's report is a helpful reminder of that fact. The FSA, along with the industry, the government and employers, has a key role to play creating an environment that facilitates and encourages greater levels of saving.

"That is why, in our proposals to the Sandler Review, we recommended that the FSA should be given a new objective to promote saving. The ABI has also been lobbying for regulatory policies that will boost saving and help people prepare for their longer and later lives.

"The FSA are right to highlight the role that greater levels of consumer education and access to financial planning can play in closing the savings gap. We have been working on a number of initiatives that will provide consumers, young and old, with generic information that will help them obtain good value from the market.

"However generic information and education are only one part of the solution. Making advice more accessible to low and middle income earners is essential and we have long been calling for a reduction in the level of red tape that surrounds highly regulated products.

"The FSA's paper also highlights important issues for firms, all of which the industry are aware of and have been working on for sometime. Over recent years there has been continuous innovation in 'decumulation' products such as annuities, but changes in legislation would be required to unleash greater innovation. We have been arguing for greater flexibility in our response to the Treasury's consultation on annuities."

Forum Response: Age Concern

Gordon Lishman, director general of Age Concern in England, told ePolitix.com: "There is clearly much confusion about what kind of provision people should be making for their retirement. The FSA's research is confirmed by our own recent findings which showed that nearly seven out of 10 people have little or no confidence about their income in retirement.

"The report throws considerable light on how key stakeholders including the financial services industry and government can do more to address the lack of awareness and complexity around planning for retirement.

"One in five pensioners already lives in poverty. We cannot allow, as an ageing society, to see future generations of pensioners pushed below the breadline.

"We support the FSA's message that people of all ages must be better equipped to make informed decisions when planning for and in retirement."

Forum Response: National Association of Pension FundsPeter Thompson, chairman of the NAPF, told ePolitix.com: "The NAPF has for years asked governments for a tax structure which treats long-term savings more favourably than short-term discretionary savings.

"If you are being asked to lock your hard-earned cash away for thirty years or more, and then to have to buy an annuity at the end, you should receive more favourable tax treatment than you do on your short-term savings which you can draw out at any time and spend on whatever you like.

"One suggestion which the government may wish to consider is to extend the principle, already adopted for stakeholder pensions, of giving tax credits rather than just tax reliefs. For example, giving all basic-rate taxpayers higher-rate relief on pension saving would do much to encourage such saving, without giving any additional benefits to the better-off."