Institute and Faculty of Actuaries (IFoA) responds to consultation on retirement reforms outlined in 2014 Budget

This week, the IFoA responded to the Government’s consultation on Retirement reforms and the Guidance Guarantee, which is part of the pension reform plans announced in the 2014 Budget.  

Nick Salter, President of IFoA comments, “The introduction of greater freedom and choice in accessing pension funds means that consumers are likely to benefit most if they receive comprehensive information about their retirement savings that reflects their wider financial and personal circumstances.  This presents a number of challenges that HM Treasury, the FCA, delivery partners and pension providers will need to overcome.  

“There are a number of issues that should be covered in the guidance sessions to protect consumers.  The IFoA recommends that as a minimum requirement this should cover life expectancy, the danger of running out of money during retirement, possible long-term care needs, and investment risk.

“People need to plan appropriately to make sure their income covers their actual lifetime.  There is a danger that they might rely too much on average life expectancy and misunderstand what this actually represents.  

“It is important that the combination of requiring people to pull together significant amounts of information and then asking them to use it to make complex decisions involving unfamiliar concepts does not overwhelm individuals.  

“Additionally, guidance needs to be in a format that will be understandable and accessible to a diverse range of audiences, including those who otherwise would be least likely to seek it.”

~ENDS~

For further comment or to answer any questions that you may have please contact Annette Heninger, Media Relations Manager at the IFoA, on 07525 592 198 or by emailing annette.heninger@actuaries.org.uk

Editorial notes:

About the Institute and Faculty of Actuaries

The Institute and Faculty of Actuaries (IFoA) is a royal chartered, not-for-profit, professional body. 

Research undertaken by the IFoA is not commercial. We are a professional body. As a learned society, research helps us to fulfil two of our royal charter requirements; to further actuarial science and serve the public interest.  

Actuaries provide commercial, financial and prudential advice on the management of a business’s assets and liabilities, especially where long term management and planning are critical to the success of any business venture. They also advise individuals, and advise on social and public interest issues

Members of the IFoA have a statutory role in the supervision of pension funds and life insurance companies. They also have a statutory role to provide actuarial opinions for managing agents at Lloyd’s.

Members are governed by the Institute and Faculty of Actuaries. A rigorous examination system is supported by a programme of continuing professional development and a professional code of conduct supports high standards reflecting the significant role of actuaries in society.

The IFoA is available to provide independent expert comment to the media on a range of actuarial- related issues, including enterprise risk management, finance and investment, general insurance, health and care, life assurance, mortality, and pensions.