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Chartered Insurance Institute
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The new pensions environment


Greater freedom and choice

In April 2015, pension savers experienced a radical change in the options available to them as the Government's pension freedoms came into force. It saw changes for people accessing Defined Contribution pension earnings; giving increased flexibility in the options available to them when taking their pension benefits. These changes also saw the creation of Pension Wise, a free and impartial government service, providing information and guidance to individuals nearing retirement.

As revolutionary as these reforms have been, the next few years will likely see further radical changes; including to pensions tax relief and the introduction of an option allowing customers to sell their annuities. Meanwhile, at the time of writing, the Government is consulting on reforms to both regulated financial advice and unregulated money guidance.

Customer needs and expectations

For many customers, pension reforms have ushered in a whole new approach to the way they think about retirement - something the sector will need to address.

Gone is the set-piece approach around a fixed retirement date and the provision of detailed information on what customers have saved and how they should purchase an annuity. 

With the new freedoms comes a fresh range of choices for customers. Not just what they can do with their accumulated savings, but also when they can access them. 

The decision process has to now accommodate this wide range of options, customer decision-making preferences and life stage triggers, rather than simply initiating the issuance of a standardised annuity quotation and a supporting information pack.

Consumer research findings 

With the new freedoms comes a fresh range of choices for customers. Not just what they can do with their accumulated savings, but also when they can access them.

Independent research commissioned by the CII in the autumn of 2015 showed that customers are now thinking differently about their retirement needs and have new requirements and expectations around information and support.

The research highlights a clear demand for earlier engagement with the decision making process and the desire by customers to take advantage of a combination of the new options open to them. This points strongly to the need for early support that guides customers through these complex and potentially life changing decisions.

  • 56% of pre-retired customers expect to  make a decision  on their pensions savings at least 10 months before they retire
  • 41% intend to take advantage of a combination of the options open to them.

Find out more about the CII research report »

The CII also engaged with consumers through a series of focus groups. The aim was to better understand the perception of the industry and to gain more insight into how firms might improve customer engagement through a more consistent and formalised approach to staff development.

There was a general feeling of disconnection, with a particular dissatisfaction towards the 'impersonal call centre' approach. Customers certainly expect staff to be professionally qualified and there was an appetite to deal with companies that invest specifically in up-skilling front line staff. Feedback indicates that a lack of consistency across the sector is a factor in undermining customer confidence.

Customer comments included:

"Consistency of experience is essential. When I call, sometimes it's great, sometimes it's a real struggle. It isn't like that with proper professionals."

"Ethics are non-negotiable. If you don't care about ethics, you shouldn't work for this type of company."

"In engineering, there are very clear standards, across all firms. So everyone knows where they stand. Why isn't it the same for pensions?"

"It's not just empathy and listening we need, it's also taking decisions. That needs ability and confidence."

It is clear that a key driver of customers' trust is contact with professional staff who demonstrate that they know what they are talking about and are able to deliver consistently high levels of customer service. Professionalism is not however restricted to demonstrating knowledge. Ethical practice and a commitment to continuing professional development need to be core parts of an organisation's culture.

Adopting a consistent approach to embedding professional standards will play a big part in shaping the reputation of the sector in years to come.