A “digital delivery” model that offered savers “standardised” outcomes based on certain financial attributes and risk assessment responses is a better way to deliver the pledged ‘guidance guarantee’, according to one of the providers that will be responsible for delivering the service.
The UK arm of Dutch life and pensions giant Aegon said in a statement today (10 June) that guidance must be able to be delivered online - and that product providers would be ideally placed to roll the service out.
Aegon’s intervention comes amid fierce debate over how guidance will be administered, with many arguing an effective information service is critical to the success of the endeavour to liberate pensions access.
It also comes in the wake of comments from the National Association of Pension Funds and the Association of British Insurers that an April 2015 deadline to coincide with the proposed date for the new rules coming into force may not be met.
Napf has called on the Financial Conduct Authority, which is drafting the guidance plans, and the government to report back by the end of next month, five months ahead of the original schedule.
Aegon outlined three key elements to making the service successful, including that the service must include a “digital delivery option” that would be based on “standardised” outcomes and a “ban on providers pointing to their own products” .
It also said any tool must “take a rounded view of people’s retirement savings”, including taking account of multiple pension pots, attitudes to risk and income requirements, and ensure that full advice is clearly signposted.
David Macmillan, UK managing director, said: “A digital service that provides users with standardised outcomes based on the information they input as often as they like would, in our view be more useful than a one off face to face engagement.”
Aegon added the ban on product promotion “should remove any concerns over a lack of impartiality”.
Several rival providers, including Legal and General, MGM Advantage and Royal London, have cited questions over impartiality and argued providers should not be involved at all in delivering a service originally described by the chancellor as “free, impartial, face-to-face advice”.
Adrian Boulding, pensions strategy director at L&G, said: “Clearly providers are not impartial – we are interested in the outcome, hoping that the customer will buy our products.”
According to Aegon, with suitable safeguards in place providers which have “invested in digital engagement tools to support their customers” are in fact better placed than most to deliver guidance.
Mr Macmillan said: “There has been an excessive focus in the industry and the media over who will deliver the service rather than how it will meet people’s needs. In our view, this debate is unhelpful as it does not address the critical question of will the service actually help people in the UK get ready for and make good decisions at retirement?
He added: “There is a growing trend towards a phased retirement whereby individuals move into part time work and may need to start drawing on some savings before they move fully into retirement.
“A digital service would allow them to consider their options at different times in the run up to retirement and would not rule out the option of financial advice for complex decisions.”
Mr Macmillan also referenced the recent announcement by the FCA that it is set to launch a consultation on “automated” and simplified advice models as evidence of the growing consensus on the need for online tools.
He said: “If advice, which is more detailed and complex, can be offered digitally then we see no reason why [guidance] cannot be offered digitally, providing greater convenience to users and allowing them to dip in and out.”
