Pension bank accounts to be reality by 2020, researchers say

Retirees will be taking out retirement funds via 'pension bank accounts' by 2020, experts have predicted. Altus Consulting has released an industry white paper this week, which made the forecast, and said these accounts are expected to be aimed mainly at customers with small pension pots.Authors of 'The High Cost of Freedom: Retirement in 2020' report stated: "Pensions bank accounts will emerge offering cashpoint access to customers' retirement funds, targeting clients with small pots."WisePension has just announced a pension credit card to be launched in April, which will enable savers to spend up to a pre-agreed limit every month with the balance being settled out of the pension fund.{desktop}{/desktop}{mobile}{/mobile}"The rest of the industry will be watching take-up of this idea very closely. Providers who already have banking licences would be well set up to leverage their infrastructure by linking pension accounts to online banking, while platforms who offer drawdown facilities may need to re-structure their pricing and form strategic links with banks to facilitate smaller, more flexible payments."Jon Dean, consultant at Altus, said the "major upheaval" caused by the reforms so far will continue for most organisations.He said: "The changes in the market are likely to force many firms to reinvent themselves altogether by changing their business models and supporting systems to meet consumers' new expectations."The biggest issue is that providers will have to operate at much lower margins, as regulators are interested in cutting costs for scheme members, and consumers themselves are shopping around more than before."The main challenge we face as an industry is that in the midst of all the changes taking place, pensions themselves are no better understood than before. "However, this could present great opportunity for advisers while new products which are better suited to today's retiring market begin to emerge."

Pension bank accounts to be reality by 2020, researchers say

Related items

News from Twitter