Government plans to include life expectancy estimates as part of new point-of-retirement financial guidance have been slammed as “well-intentioned but dangerously generic” by deVere United Kingdom’s Head of Financial Planning.
Kevin White’s comments follow the Pensions Minister, Steve Webb, confirming in an interview that savers on the cusp of retirement will be provided with a life expectancy guide with the aim of helping them to make more informed financial decisions.
He explains: “Whilst any initiative that encourages people to think more carefully about their long-term financial requirements in retirement must be welcomed, there are also real concerns that this life expectancy table could be, whilst well intentioned, dangerously generic.
“The worry is that some individuals could overly rely upon this one-size-fits-all guidance, rather than making a more considered, bespoke planning approach to their finances before and during their retirement.
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“For example, if someone has £100,000 and they buy an annuity and receive £500 per month, but this table suggests that they will live for another decade, then there could be the temptation to spend £10,000 a year, and have nothing remaining should they be fortunate to live for another 10 years.”
He continues: “My concern is there is a risk that what the Government is proposing might unintentionally lead some people to mistakenly believe that they are fully informed to make the right decisions for their retirement based on generic guidance.
“In my view, what is going to be provided is akin to Googling a serious health issue, rather than seeing a doctor.
“With all retirement planning matters the stakes are high and all encompassing for individuals and their families not to seek professional independent advice.
“In short, I would urge anyone not to exclusively rely upon general financial guidance.”