Simplification is the key - Centre for Policy Studies
Simplification is the key - Centre for Policy Studies
Simplification is the key - Centre for Policy Studies
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Ideally a single plat<strong>for</strong>m should be able to accommodate <strong>the</strong> whole panoply of<br />
retirement savings products, including life insurance products (including life bonds),<br />
OEICs, unit trusts, employer share purchase schemes and DB pensions.<br />
10.3 Lower costs<br />
A common leg<strong>is</strong>lative framework would give providers an additional incentive to<br />
embrace technology, not just to serve customers better but also to cut admin<strong>is</strong>tration<br />
costs. Th<strong>is</strong> <strong>is</strong> essential if savers are to retain a larger proportion of <strong>the</strong> benefit of <strong>the</strong><br />
power of compounding of accruals.<br />
10.4 Off-line customer communication<br />
A lifetime savings plat<strong>for</strong>m would offer providers a single customer interface through<br />
which to communicate, and th<strong>is</strong> would ass<strong>is</strong>t d<strong>is</strong>tribution, but only to <strong>the</strong> more financially<br />
and IT literate. Traditional phone and paper support would still be required by most of<br />
<strong>the</strong> population, and some in higher income brackets may require a more interactive<br />
service than could be delivered online (perhaps from a private banking business).<br />
10.5 D<strong>is</strong>tribution<br />
Provider surveys 147 suggest that if <strong>the</strong> lifetime savings concept were made manifest in a<br />
simple and accessible manner, more people would save more. For asset managers,<br />
insurers and plat<strong>for</strong>m providers, that translates into more management fees and fur<strong>the</strong>r<br />
economies of scale.<br />
In respect of company-sponsored pension schemes, those surveyed typical responded<br />
that <strong>the</strong> presentational benefits of placing such schemes onto a lifetime savings plat<strong>for</strong>m<br />
could increase employee contributions by 15% (and nearer 20% amongst those earning<br />
£30,000 to £60,000). Providers would have (product) cross-selling opportunities if<br />
employer contributions were to go directly into employees’ savings products (ra<strong>the</strong>r than<br />
into group schemes).<br />
10.6 Rebuilding trust<br />
Lifetime savings plat<strong>for</strong>ms would provide <strong>the</strong> industry with an opportunity to restore trust<br />
in itself. The industry could, <strong>for</strong> example, develop a set of principles and standards <strong>for</strong><br />
<strong>the</strong> operation of a lifetime savings plat<strong>for</strong>m, to help it achieve an industry-wide culture<br />
change, <strong>the</strong> objective being to put customers (ra<strong>the</strong>r than shareholders) first, and deliver<br />
better value to <strong>the</strong>m.<br />
147 The author was granted access to surveys conducted privately by three life and pensions FTSE 100<br />
companies.<br />
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