How to offer real freedom and choice

What is at the heart of current concerns are the unintended consequences of what that means in practice.

Advice and guidance alone will not meet the needs of millions of savers approaching and entering retirement

Everyone wants control over the decisions they have to make in their lives. That does not mean they want to have to make all those decisions themselves, particularly complex ones that could have extremely important consequences to their long-term wellbeing.

Take saving for a pension. Before auto-enrolment, we all had control over whether we saved or not. Most people did not save, because there were too many important decisions to make over how, where, when and how much they should save.

With auto-enrolment in place, everyone still has control over whether to save or not, but most of the hard work has been done for them.

The need for pre-set retirement options

So, if we are giving people the freedom to do whatever they want with their money in retirement, why not give them the freedom to not have to worry about it too?

The choice should absolutely be theirs, but the route to a good outcome should be the simplest option on the table. 

We want to see all qualifying workplace pension schemes offer a straight-through solution from saving to taking an income, so anyone who does not want to shop around does not end up worse off.

These pre-set retirement options would meet high minimum standards, in the same way that workplace pension schemes do. They would extend governance and oversight for members who do not opt-out, helping them get the most out of their pension savings for the rest of their lives.

That should give peace of mind to all those savers, millions of our members among them, who simply want the money they have saved up for a retirement income to give them a retirement income.

Before auto-enrolment, you could go to a financial adviser to get expert help on pensions and investments. There was, and still is, a thriving and competitive advice market to serve people who seek it out.

Auto-enrolment has not changed that market, it has just made sure that people who were not getting advice for one reason or another did not end up with nothing.

A thriving and competitive advice market should absolutely serve the people who want it in retirement too. But we must acknowledge the evidence that advice and guidance alone will not meet the needs of millions of savers approaching and entering retirement.

Strong defaults that get most people to the right answer most of the time are also needed. By taking away the worry, we can give people real freedom and real choice.

Gavin Perera-Betts is chief customer officer at mastertrust Nest