The Retail Distribution Review and small pension pots

Document type
Briefing
Author(s)
Berry, Craig
Publisher
International Longevity Centre - UK
Date of publication
1 March 2012
Subject(s)
Poverty Alleviation Welfare Benefits and Financial Inclusion, Older Adults
Collection
Social welfare
Material type
Reports

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The Retail Distribution Review (RDR), under the auspices of the Financial Services Authority (FSA), arrives at a decisive moment in the development of the UK pension system. There is a significant rise in the number of people enrolled in ‘defined contribution’ pension schemes, meaning that more people will be required to make investment and decumulation decisions for themselves. This policy brief is concerned in particular with the implications of the RDR for people with small pension pots (SPPs). People with SPPs are less likely to seek financial advice, therefore reducing the likelihood they will maximise their retirement income – if costs of advice increase, this trend is likely to intensify. ILC-UK therefore recommends that the government and the FSA should investigate in more detail the opportunities to mitigate the implications of RDR for financial advice for people with small pension pots, and in particular people who could benefit from an enhanced annuity by shopping around.

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