MGM Advantage has urged the retirement industry to stop writing off small pension pots as undeserving of attention, saying it would be a disaster if it were to alienate people by not considering their needs as equal to wealthier individuals.
The retirement income specialist said it wanted the industry to collectively show its concern about getting the best outcomes for people with comparatively small amounts of savings as it is with the wealthy.
According to Association of British Insurers' figures cited by MGM, the average annuity last year was bought with a pension pot of £35,600, suggesting that many UK savers would generally be categorised as having a small pot.
Andrew Tully, MGM Advantage pensions technical director, said: 'As part of the financial guidance for all advocated at the Budget, we as an industry need to be acutely aware that more people, many of them with smaller amounts of saving, will look to advisers and providers for help.
'It would be a disaster for this new pension's environment if we were to alienate these people by not considering their needs as equal to those who have greater wealth.'
He said that people who had saved all their life 'wanted to be assured' that the industry was going to work as hard as it could to get the best possible retirement income, regardless of their pension pot size.
'Commentators - and I include myself in this - often give the impression that those people with smaller pots will only have one solution under the new flexible regime,' Tully added.
'That they should take all their money out as lump sum without considering any other solutions. I think this does them and us, the industry, a disservice.'
He stated that although it may be right to take a lump sum, many of these people with smaller pots might have other assets and needs, and require a broader consideration of finances. For instance, people might have health issues that qualify them for better incomes through enhance annuities, and so have the potential to generate a reasonable level of sustainable lifetime income.
'Pension pots might seem small to those working in the industry but for people that own them they are often significant and crucial to retirement plans,' he said.
