2016 has been a year of changes and surprises! While the news in recent months has been dominated by the Brexit debate and the election of Donald Trump, the subject of pensions and retirement has continued to be highly topical. UK automatic enrolment is entering the final stage of the initial rollout, with almost two million new employers starting pension schemes for the first time and the major employers reaching their first re-enrolment dates. In Ireland, the introduction of automatic enrolment is increasingly expected to happen but, as to the format, nothing is decided.
As populations age across Europe and generous DB style schemes decline, the provision of adequate retirement income has become the new focus. For DB schemes there is a significant increase in transfer activity, as members seek access to flexibility. For DC schemes and DC providers there is the challenge as to how much flexibility has to be supported to meet the demands of members and advisers. What is evident across all markets is the need for much better member/customer engagement, access to new forms of guidance/advice, perhaps automated, and new innovation in products to meet the challenges of later-life income. A single pensions dashboard is well on the way to reality in the UK market, matching similar initiatives across Europe – a key element in a person really engaging with their retirement position, and one we are actively supporting.
Waiting in the wings in the UK market we have the new Lifetime ISA. DC providers, Trustees and Employers will all need to consider enhancing the long-term savings options for their employees, with LISA sitting alongside pensions to help individuals plan better for their own specific long-term needs. However, the real challenge is surely the fact that more and more people will reach retirement age without sufficient income to support their later-life needs. Staying in work longer or living a life of relatively poverty are not the choices to which most people aspire. This is a huge industry challenge.
In a similar vein, the UK and Ireland populations continue to be significantly under-insured. The protection industry is now backing the workplace as the channel of choice to improve this position, perhaps by linking protection more closely (again) with pensions, or by persuading the Government to mandate income protection in the same way as automatic enrolment.
The one thing we can be sure of in this period of uncertainty is that further changes are inevitable. As an industry, consumers depend on us for their future financial security. Change means challenge but, taking a 'glass half full' standpoint, it also means fantastic opportunity.
As we enter 2017 we are geared up to support you in rising to the challenge and look forward to revelling in your future success.