FOR YEARS MILLIONS GOT NO HELP WITH PENSIONS – HERE’S HOW THINGS ARE CHANGING

The Government and the financial watchdog are going to allow businesses, including pension firms, to give people more support in helping them make better financial choices, we found out this week.

“Targeted support” – as it has been termed – does not sound desperately exciting, but this is a massive step forward. It’s something the financial industry has been working on for a long time, and it should make a real difference to people’s lives.

The idea is that registered banks and other financial firms can guide people to investment and retirement decisions that suit their circumstances, and leave them in a better financial position, in ways they could not do before.

At the moment, such firms haven’t been able to help people in the way they want to – from discussing when it might be the right time to start investing, to making robust decisions about their retirement income. These new changes will open the door to vital support.

One of the central planks in the plans is letting companies tell individuals about what “people like them” have done that has worked for them – so they don’t feel so alone in making decisions.

Before now, those who wanted help generally paid for financial advice. Given that so many who need assistance either can’t afford to pay for financial advice or can’t see how it would benefit them, this will go a long way towards bridging the gap – and is a vital part of building a retail investment culture.

This announcement brought some excellent news on some of the detail, particularly around retirement journeys. It’s an area where we see a lot of scope to help people further. There are several options available to people at retirement. They’re not always particularly easy to understand, and in some cases once they are made there’s no going back.

People who have been automatically enrolled into their pension have been able to save for the future without particularly engaging with it. However, when they reach retirement, they will need to make decisions that require real engagement and understanding to ensure their retirement income works for them.

The right support can make all the difference. One of the difficult questions that this week’s announcement has answered is how to help people when buying an annuity, which is when you trade your pension pot for a guaranteed annual income in retirement.

The new rules will allow pension providers to point to whole-of-market annuity brokers – who can offer annuities from a wide range of lenders and providers – which is a pragmatic solution to a complicated problem.

Of course, in financial services, change is never simple. The regulator has had to build the new approach around all sorts of other initiatives that have been designed to help simplify decision making at retirement.

Already there are plans for so-called “guided retirement” – the idea from which there will be a default way to take retirement income, so people who can’t make a choice end up with an option that’s reasonable.

There are also investment pathways – designed to cut down the number of choices people have to make. Targeted support goes further than either of these options. It recognises that there’s no such thing as a one-size-fits-all retirement, and it enables companies to put clients at the heart of their own choices.

There are still some things to unpack in the coming months. Firms will need to understand exactly when targeted support tips over into being financial advice, which will be crucial in ensuring they offer the right amount of support to each client. The wording of the rules may also limit the extent to which firms can offer in-person support, which can be problematic for those who want the reassurance of a conversation.

One of the things I don’t love is that firms will have to label what they are doing as “targeted support”. I don’t think this needs to be named – it won’t have positive connotations for some people.

In fact, I have heard some firms reporting that this approach can make people less likely to act on the information they receive. But, of course, this is a brand new approach, and exactly how people respond remains to be seen.

It’s also going to be interesting to see how targeted support interacts with the Money and Pensions Service – an organisation there to help improve people’s financial understanding.

The rules mean companies will need to direct people towards this service where it’s appropriate. It’s unclear what questions will be asked, and how they will respond, so that will be something to keep an eye out for.

The rules are due to come in early next year, so it won’t be long before we can start supporting clients better. It’s a massive opportunity to help people get to grips with savings, investment and pensions in ways they never have before.

Nathan Long is head of targeted support at Hargreaves Lansdown

2025-12-11T17:19:39Z