PensionsSep 23 2014

Napf warns on tight timetable for pension guidance

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The National Association of Pension Funds has stressed that it is critical work starts in October on standardised wording and branding to direct consumers to the ‘guidance guarantee’ if it is to be ready in time for rollout before next April.

In response to the Financial Conduct Authority’s consultation on the at-retirement reforms, which closed yesterday (22 September), Napf’s head of policy and research Jackie Wells said that: “Finding a way to direct pension scheme members to the guidance service, and in a way that they can use it to make an informed decision, will take effort and ingenuity”.

She stated that the organisation has repeatedly highlighted the pressure the short timescale for delivering the Budget proposals is putting on pension schemes.

“Mistakes or delays will be detrimental to schemes and savers. We ask the government and FCA to ensure pension schemes are able to promote the guidance service effectively to scheme members.”

Napf’s response also pointed out that for some large pension schemes the cost of repeated signposting could be in excess of £100,000 a year, urging the Department for Work and Pensions and FCA to consider ways to deliver the service in a way that maintains pension savers’ interest and awareness while keeping costs at a realistic level.

Ms Wells stated: “Approaching this thoughtfully will maintain pension savers’ engagement and will also prevent considerable costs being added to pension schemes. In the case of the largest schemes this could be in excess of £100,000 a year – and will have to be cross-subsidised by scheme members.”

She also noted that standards for the guidance delivery partners are an essential part of helping scheme members make the right decisions, adding that they should not inadvertently exclude or restrict any of the key flexibilities for savers.

“For example the guidance service failing to point out drawdown facilities that trust-based schemes may offer their members.”