The Citizens Advice Bureau will be delivering the face-to-face element of the chancellor’s ‘guidance guarantee’, the Treasury has confirmed, following the Treasury Select Committee raising concerns about the Money Advice Service’s part in the guidance service.
The Money Advice Service will be building the online part of the service and developing guidance material which will be provided to customers, as well as building a directory of regulated advisers for those wishing to go further than the guidance.
The Treasury also confirmed that Tpas will be running the telephone-based service,
At this year’s Budget, government announced radical pension changes making pensions a far more flexible savings vehicle. From April 2015, around 320,000 individuals retiring each year with defined contribution pension savings will be able to access them as they wish, subject to their marginal rate of tax.
Alongside this, the government announced that it will ensure everyone able to take advantage of these flexibilities can access free and impartial guidance on their available choices as they approach retirement.
Andrew Tyrie, chairman of the Treasury Select Committee, previously wrote to chancellor George Osborne expressing dismay that the Money Advice Service will play a part in the guidance guarantee.
In July, the government announced that the guidance guarantee will be delivered by independent organisations, including Tpas and Mas, and will by funded via an industry levy.
Mr Tyrie raised concerns that the promised independent review of Mas will only consider its governance within the current statutory framework and not whether the Financial Conduct Authority needs to have additional statutory powers to hold it to account and scrutinise its budget.
Mr Tyrie’s letter said: “These concerns are relevant in the light of your announcement today that Mas may play a tole in the delivery of the pensions guidance guarantee. Until the reviewer is able to consider carefully the key questions recommended by the committee, we would have reservations about the Mas playing a significant part in such crucial work.”
Mr Tyrie said of the recent proposals: “The Treasury Committee expressed serious reservations about the government’s initial proposals for providing this guidance. The new proposal addresses many of these concerns and is a big step in the right direction.”
Mr Osborne said the government will legislate this week to underpin the guidance, including an amendment which will make imitation of the guidance service a criminal offence.
He said: “Giving people the freedom to manage their own pension is the backbone of this government’s radical pension reforms and key to our long term economic plan.
“That’s why I’m delighted that respected and impartial consumer advice organisations - Citizens Advice and The Pensions Advisory Service - will be offering free face to face and telephone guidance to people across the country from April, as promised in the Budget.
“These organisations have years of experience dealing with a variety of consumer issues and are well placed to be accessible to everyone who reaches pension age and feels they would benefit from the guidance.”
Caroline Rookes, chief executive of Mas, stated: “We are pleased that we are at the heart of the delivery team, working to develop the new guidance service.
“Our experts are seconded into HM Treasury, playing a key role in helping to build the online part of the service and develop the guidance which will be provided to customers. The Treasury have made it clear how much they value the contribution we are making.”
Michelle Cracknell, chief executive of Tpas, said: “Cab has a strong local and national presence and the partnership between Tpas and Cab has existed for many decades, so anyone who had a pension question had access to high quality free, impartial guidance on this topic.
“Our experience on the helpline is that our customers value the access to specialists and the bespoke and personalised conversations that we have with them about their retirement options.”
Gillian Guy, chief executive of Citizens Advice, said: “As a trusted, independent charity, Citizens Advice is in a unique position to deliver face to face pensions guidance. We have 75 years’ experience working at the heart of communities, helping people get to grips with their finances. It’s a natural fit for us to help people understand their pension options and make choices for their future.”
However, Huw Evans, the Association of British Insurer’s deputy director general and director of policy, commented that clarity is still needed on several outstanding issues, including what the guidance will actually look like and how the tax and regulatory aspects of the reforms will work in practice.
Malcolm McLean, senior consultant at Barnett Waddingham, added that MAS not being appointed as a front line delivery partner comes as a surprise.
“It will doubtless be seen by many, rightly or wrongly, as something of an indictment of what the government thinks of their track record in this area so far.
“As it is, it now means that a considerable burden will fall on TPAS as the pension experts and specialist service providers within the new partnership. They have the knowledge and experience to carry out this (far from easy) role, but are likely to need quite substantial extra resource capability to process the numbers of cases that may well come their way over a short period of time.”
peter.walker@ft.com
