OPTIMISING VALUE IN RETIREMENT

A copy of this report can be downloaded from their website www.pica.org.uk and the central recommendation is - The Pension Income Choice Association (PICA) believe that the default option should be for everyone to review their options at retirement. They suggest three steps

• The first step would focus on the choices and decisions people face at retirement and the action they need to take
• Step two would require the production of a personalised statement containing sufficient information for people to use to obtain quotations
• The third step would be a short communication requiring the member to inform the company/trustees how the fund should be applied

There is no doubt about the importance of the issues and any steps to improve the way in which annuities are arranged is to be welcomed. I will watch with interest the progress of Pension Income Choice Association and my hope is that they will tackle the really important issues for customers rather than just become another self interest group.

The important issues for customers are far greater than just arranging the highest paying income, and these issues include:

• Encouraging investors to take a more active interest in their pensions before they retire - the lesson from the credit crunch is that those who do not invest in lower risk funds before retirement run the risk of retiring with a smaller pension pot than expected
• Educating investors about the key issues at retirement including the various risks such as inflation, longevity, investment and changing circumstances
• Helping investors understand the full range of options including those with potential for income growth
• Discussing ways in which investors can maximise their income over the longer term, perhaps by sharing some of the risk with annuity providers in return for a share of any gains

So good luck to the Pension Income Choice Association and don't lose sight of the key issues for those approaching retirement.