Pensions: Older People
The question
To ask the Chancellor of the Exchequer, what assessment her Department has made of the potential impact of investment‑market volatility on retirees using income drawdown arrangements; and if she will conduct a review of (a) pension provider fee structures, particularly charging full management fees during periods of negative fund performance and (b) the adequacy of safeguards for retirees who are reliant on drawdown income.
Answered by Torsten Bell
Individuals do face both investment and longevity risk in today’s Defined Contribution pension landscape, That can include investment risk during retirement. The government is acting to help savers manage these risk, including via the introduction of default pensions through the Pension Schemes Bill. This will ensure that savers in workplace defined contribution schemes have a default solution in place for retirement, helping secure a sustainable income in later life. Trustees and providers will need to consider how the solution they put in place help protect individuals from investment and longevity risks.
FCA rules already require drawdown providers to provide annual statements to consumers which contain enough information for them to review their position. This ensures that consumers can make choices regarding their drawdown arrangements on an informed basis.
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