U.K. pensions minister: 'A lot of people are uninformed' about retirement planning


Wider retirement planning in the U.K. is still impacted by issues of individual participants' grasp of their own funding positions, Paul Maynard, U.K. minister for pensions, said in an interview.

"An important thing to me is that you have the right engagement at the right time, that helps (participants) understand where they precisely are, because I think a lot of people are uninformed. They're maybe in a better position than they think they're in, maybe in a worse position than they think. But they need to know what that position is," Maynard said.

At an earlier presentation at the Pensions and Lifetime Saving Association annual investment conference in Edinburgh on Feb. 29, Maynard acknowledged that "inertia is a wonderful thing" when it comes to areas such as automatic enrollment, but that also "inertia at every stage of your journey towards a retirement isn't necessarily a good thing," and more conversations were needed "at the right time" with participants.

Key discussions in the U.K. retirement space have arisen from the Mansion House Compact, proposed reforms announced in July by Chancellor for the Exchequer Jeremy Hunt. The Mansion House proposals include defined contribution plans committing to investing 5% of their default funds into private U.K. companies by 2030, and 10% for defined benefit funds.

The issue of how to mandate this has also been a point of contention, with recent reporting by the Financial Times showing disagreement between Hunt and the Financial Conduct Authority over whether to obligate retirement plans to disclose how much of their portfolios are invested in the U.K.

"There are no plans to make (the Mansion House Compact) legally binding," Maynard told P&I. "The 10% figures are targets for the industry to work towards. I would welcome more and more pension funds signing up to them. It's an iterative process, in the sense that you can continually improve the framework in which the funds can invest in U.K. assets."

Further updates to U.K. retirement proposals, including the efforts to increase allocations to private equity within the nation as part of the Mansion House Compact, are anticipated to be revealed in the government's Spring Budget, to be published next week.

Source: https://www.pionline.com/retirement-plans/uk-pensions-minister-lot-people-are-uninformed-about-retirement-planning 

Posted by: Branwell Ford