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UK retirees need advice but are reluctant to pay
Retirees in the United Kingdom need advice on how to deal with their retirement income but too few are prepared to pay for it, according to UK Pensions Institute director, Professor David Blake.
Addressing the Association of Superannuation Funds of Australia (ASFA) conference on the Gold Coast, Blake pointed to the problems which had arisen in the UK flowing from the freedom of choice regime around retirement incomes which had seen a shift away from annuities.
He said this had given rise to a situation in which retirees were opting to take lump sums but were doing so without obtaining appropriate advice.
Blake said this had given rise to a situation where scammers had never had it so good at the same time as reinforcing the need for people to have viable retirement strategies.
He said that general guidance was not enough but while people needed more detailed advice, few were prepared to pay for it.
Blake said that while some effort had been made to provide people with "decision trees" even this was problematic because of the regulatory implications of such arrangements.
He said that while both Australia and the UK did not have a deferred annuities market, he believed Australia was more clearly headed in the right direction.
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The future of superannuation policy remains uncertain, with further reforms potentially on the horizon as the Albanese government seeks to curb the use of superannuation as a bequest vehicle.
Superannuation funds will have two options for charging fees for the advice provided by the new class of adviser.
The proposed reforms have been described as a key step towards delivering better products and retirement experiences for members, with many noting financial advice remains the “urgent missing piece” of the puzzle.
APRA’s latest data has revealed that superannuation funds spent $1.3 billion on advice fees, with the vast majority sent to external financial advisers.
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