The ABI is concerned that half of fully withdrawn pension pots are not spent but shifted into other savings and investments which the ABI says could mean consumers paying too much tax and also missing out on compound investment growth.
It fears some consumers are blundering due to lack of long term planning and engagement with their retirement options.
The trade body’s plan is contained in a new report, Interventions in the Retirement Market, which outlines a series of measures the financial provider trade body wants to see.
The ABI says that three years on from the dawn of pension flexibility reforms under the Pension Freedom changes, it is “stepping up” efforts to ensure that consumers are getting the best out of their retirement.
The ABI’s five point plan promotes active consumer engagement – empowering consumers to make their own, well-informed decisions through improved communications and use of guidance.
The five interventions the ABI wants to see are:
• Intervention 1: Tailored and phased customer communications throughout a saver’s life
• Intervention 2: Creating the mid-life MOT
• Intervention 3: Prompting more people to use guidance
• Intervention 4: Making the retirement risk warnings fit for purpose
• Intervention 5: Improvements to communications once someone has retired
Rob Yuille, head of retirement policy at the ABI, said: "Pension freedoms put more power into the hands of consumers, but this flexibility also increased the complexity and risks that consumers face.
“Our recommendations are for interventions that will transform the way people interact with their pension pots and help people navigate their choices. We’re calling on a number of stakeholders today to help us to deliver the practical steps needed to make these interventions happen.”