Despite the Lifetime ISA "likely to prove popular in some segments of the savings market", Grace has raised concerns that it will encourage individuals to opt out and lose valuable employer contributions.
He expanded:
"Muddying the waters between retirement and other forms of savings could reverse achievements in recent years, so we need to be able to explain the merits of each and distinctions between the two, with platforms ideally positioned to facilitate a cross-savings view. Pensions with the addition of employer contributions and tax relief will come out on top if individuals are looking towards retirement saving.”
He noted that in recent years, insurers have channelled their efforts into adapting to regulatory change in the form of auto-enrolment, the charge cap and pension freedoms. But he believes that while these Government initiatives have increased savings and customer engagement, they’ve "come at the expense of industry and customer driven innovation".
However Grace said that the industry has recently seen a "period of seismic changes" in technology, regulation and consumer attitudes and provider strategies, with "their diversity becoming apparent".
He added that there’s a clear distinction emerging between those pursuing growth based on modern platform propositions with adviser support versus those opting to maintain legacy books.
Grace concluded:
"I see 2016 as the year this will change with providers beginning to show their strategic hand as technology increasingly redefines business models in every sector. For pensions and savings, a clear digital strategy is essential to enable advisers and employers to offer simple, straightforward and holistic services."
