Targeted support will help a large majority of savers and nudge them towards better solutions, but could be “detrimental” for a minority, Age UK head of policy, Christopher Brooks, has warned.

Speaking at a panel session at the Pension and Lifetime Savings Association (PLSA) Investment Conference in Edinburgh, Brooks said he believes targeted support will help a lot of people make decisions on how to spend money at retirement, but it won’t help everyone.

“I think targeted support will help lots of people, I could imagine out of the non-advised population, it will probably help the large majority who will be nudged towards better solutions.”

However, he said that there will be some who will be given “inappropriate” support.

“I don’t know how that’s going to go. I don’t think the Financial Conduct Authority (FCA) has really addressed that very thoroughly so far, so it could be quite detrimental to some people,” he continued.

“Then of course because there is no liability or suitability requirements on delivering it and there is no real meaningful way of getting readdressed if you are sent down the wrong route.

“So, it could be helpful for the masses but that minority who are on the fringes it makes worse.”

He argued that he sees targeted support as an “additional risk” that the FCA has created,
where in addition to all the other risks that defined contribution (DC) savers bear, they are now having to bear the risk of being given “bad advice”, effectively, with no redress.

“I think it’s a good idea in theory, but I think that bit has not been thought through satisfactorily,” he noted.

The FCA published a consultation on proposals to introduce targeted support for pensions as part of the Advice/Guidance Boundary Review, which closed on 13 February.

Pension professionals broadly welcomed the consultation but raised concerns over regulatory restrictions and costs.

Later in the session, Standard Life managing director individual retirement, Claire Altman, acknowledged that there is a need to address as a society the “growing problem” of the idea of a “nirvana of a happy retirement” for 30 years, which she said will not be the reality for most people.

“I think we all know as an industry that the shift from defined benefit (DB) to DC has not yet been fully felt,” she said.

“The thing I think that a lot of us are worried about is that by the time we actually get around to properly thinking about it, it is already a problem that is too late and we are then running to catch our tail and deal with it.”

However, she said she believes that Pension Minister, Torsten Bell, is currently “grappling” with this and that “if he stays in his role long enough, we can begin to make a meaningful impact here”.

“I think there are a lot of people who are really seriously thinking about this because I do think the products exist, but maybe not exactly in the form they currently are available in,” she stated.

She said that the industry knows how to manage longevity risk, about health, and that if a saver lives in X postcode how long they will probably live.

“We do know all of that stuff, the question is then how do we make sure the right people are getting the benefit of that,” she said.

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