As the initiation of the new pension reforms looms (6 April), the pensions industry is gearing up for the changes. But is enough being done to make access to pension pots and information simple and practical?
In a survey, Aegon UK questioned respondents on their understanding of the new pension freedoms. Worryingly, two-thirds (65%) of those surveyed said that they didn't fully understand the new options that will soon become available to them. Considering that there is not long to go until the new reforms are in place, this is a major issue.
However, the research revealed that a move to digitise the pensions industry could help to improve knowledge. Of those asked, 85% said that having an online tool would boost their understanding, while another 61% said that they would like to be able to manage their pension savings online or via an app.
This would put the pensions industry on the same footing as the banking world, where 90% of respondents manage their day-to-day transactions online. Currently, however, only 23% of those questioned manage their pensions in the same way, despite a high number saying that they would like to.
Why the disparity? Well, this lack of engagement isn't necessarily due to apathy – 25% of respondents said that the biggest barrier to them managing their pensions online was because their pension provider simply doesn't offer this service.
"People want digital options that offer convenience and easy access but the industry has so far been slow to respond," commented David Macmillan, managing director at Aegon. "At a time when consumers are facing complicated and major decisions on what to do with their pension pots, it's our responsibility as an industry to provide support in the way people want. If we want to help the UK population engage with their retirement saving, then we must give them the tools they need, and want, to get ready for retirement."
The research clearly suggests that many are crying for an online solution to their pension management – and the industry is listening. The FCA has announced a long-term plan to introduce a 'pensions dashboard', which will enable consumers to view all of their pensions online in one place. However, this change is likely to be in the pipeline for quite some time.
If your pension provider doesn't currently offer an online tool for you to view and manage your pensions, then it is important to get as much information as you can through other means.
When you get a pension statement through the post, make sure you read it and take stock of what it says. You can also periodically contact your pensions provider for an update on your investments. This way, you can keep a close eye on that all-important pension pot.
It's also time to wise up about the pension changes. Contact Pension Wise for guidance and start to explore your options. Talking to an independent financial adviser is a smart move, and you can also use our annuity planner to get an idea of whether this is a good choice for you. Whatever you do, don't stay in the dark about your pension and the new reforms – this way, you will be fully prepared for when the new freedoms are in force.
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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