The independent pensions expert told the Treasury select committee on Tuesday (1 April), that the City regulator needed to clearly establish the format of advice or guidance proposed in the Budget as part of pension reforms, and warned that proposals by providers to offer their own advice on pension saving was a “non-starter”.
She said: “Any advice or guidance has to be independent, with a minimum qualification for the people offering it, and minimum standards.”
Ms Altmann added that she believed some people would continue to buy annuities in specific circumstances, but expected standard annuity sales to be “significantly reduced”, while the market would innovate.
She said: “A pension income product, where you retain control of capital as an alternative to drawdown is an option we may see.”
Earlier, the FCA’s head of savings, investments and distribution David Geale, and Chris Woolard, director of policy, risk and research, came under fire from the committee for continuing its ongoing review into the pensions market, despite the uncertainty that surrounded the Chancellor’s Budget reforms.
Their apparent lack of dialogue with the Treasury over the reforms was also questioned.
Andrea Leadsom MP said: “Is it not essential that the FCA should not pull its finger out and supply people with information on whether they should take out annuity or not?”
Mr Woolard conceded that the Treasury had not consulted with the FCA and shared its modelling into the effects of a change to annuity rules, and said “We’ll reach our own conclusions” into the reforms.
The committee also raised concerns between the blurry definition between the advice and guidance pledged by the Chancellor. Pat McFadden MP said: “From a consumer’s point of view, this could be very confusing.”
John Thurso MP said “this could be a regulatory nightmare”, while Mr Geale said: “We have several questions we need to work through.”
