The 2015 election has given us all a good shake. On the face of it, the status quo is maintained, with David Cameron and George Osborne (the man who brought us pensions flexibility) returning to office. But half of the previous coalition has all but disappeared, including Steve Webb, arguably one of the most well respected Pensions Ministers in recent times. What does this mean for the life and pensions (L&P) and wealth markets?
One thing’s certain, and that’s the continued downward pressure on costs. It’s not just the regulator who has an eye on reducing costs for pension scheme members. Ros Altmann, has previously called for a review into pension charges for legacy and new products. It remains to be seen whether she’ll carry this out as part of her new role as Pensions Minister. Given her commitment to improving “financial fairness” and education for consumers, it seems likely.
Altmann also wants providers to publish their charges in pounds and pence rather than percentages, to help consumers understand what they’re paying. It all makes perfect sense. And, it’s enough to strike fear into the heart of every IT Director in L&P and platform businesses across the land. That’s before we even begin to consider the tax implications of devo-max and the post-election calls in some quarters for a consultation on devolution across the UK.
For life and pensions and platform businesses it’s safe to say, there will be a continued need to respond quickly to change. Welcome efforts to create simplicity for consumers, can ironically bring complexity into the world of L&P and platforms. Costly, resource hungry change programmes aren’t going away.
As consumers – helped by more accessible information about their options – wake up to the freedoms they now have at retirement, we’ll see more demand for propositions and service delivery that offer personalised options and journeys. Advisers will expect providers to support them with better planning tools to explain investment and mortality risks (amongst other things). For businesses with multiple legacy systems, the question is, how viable are these systems in the long term and can they adapt to consumer demand?
Inevitably, all roads lead to a modern, platform solution. A holistic customer view and free movement of assets between tax wrappers – whether D2C, advised or through the workplace – is good for the consumer, employer and adviser. Scalable technology, with straight through processing and all the associated cost savings, security and audit trails is utopia for providers. Outsourcing also ensures expert technology and software development, leaving L&P providers and wealth platforms to do what they do best: look after customers and their money.