Dominic Lindley: First, there will be strong governance around the options offered, and because it is a trust-based scheme, there will be a strong duty for me, as a trustee, to act in the best interests of my members when selecting the products, whereas that is completely absent for insurance companies.
One of the things you could do is this. New clause 5 gives the Department the power to impose a duty
“to act in the best interests of members”.
At the moment, the intention is that that will apply only to the CDCs, whereas you could expand that power to give insurance companies a duty to act in the best interests of members. That certainly would preclude them from offering annuity rates 20% off the market best. If my mum takes out an annuity with a rate 20% off the market best, that is like taking the last 11 years of her pension contributions out into the street and just burning them. Nothing in the Bill introduces that strong governance around retirement income processes.
However, there are also some extra lines of defence that need to be introduced. You could expand the charge cap, which at the moment applies only during the investment phase, to income draw-down arrangements. You could require, as was suggested earlier, an extra line of defence by getting pension schemes and providers to ask specific questions at the point at which people are making decisions.