Insurer responds to FCA Terms of Reference Retirement Outcomes Review
In its response to the FCA Terms of Reference Retirement Outcomes Review , LV= is calling for the regulator to make it compulsory for pension providers to request consumers sign a form to say they have used Pension Wise, or actively declined it, if they are not taking regulated financial advice before accessing their pension income.
In addition, LV= has also stated that providers should be compelled to annually inform customers over 55 who are able to access their pension each year that they have the option to switch provider and may get a better deal if they do so, signposting them to Pension Wise for more support. The insurer believes that once consumers have taken their 25 per cent lump sum cash at age 55, their existing provider then manages to “internal vest” the customer’s remaining pension sum, rather than encourage them to shop around and get the best deal and most appropriate product.
Philip Brown, Head of Policy, LV= Life and Pensions said: “It is both unfortunate and disappointing that consumer switching has decreased since the introduction of the pension freedoms. The reforms have opened up options to people but it’s vital that they make the right decisions and get the most from their money. We believe guidance should be compulsory and that customers should actively engage with Pension Wise before they can access their pension income. Making it compulsory for pension providers to ask the question will go some way to signposting Pension Wise as a source of guidance.
“Similarly customers should be encouraged to shop around. Compelling providers to annually inform customers over 55 years that they have the option to switch provider – and may get a better deal if they do so – will highlight there are options available. We believe this initiative, coupled with better awareness of Pension Wise and the FAMR recommendations, would encourage greater consumer switching.”
LV= research has found: