Teresa Fritz, member of the Financial Services Consumer Panel, has told MPs the scope of Pension Wise service is limited and needs revisting.
Speaking yesterday (8 September) to the Work and Pensions select committee hearing she said: “We do feel the scope of the Pension Wise service is limited.
“We would like to see scope of Pension Wise very quickly amended.”
Pension Wise is currently limited to offering information and not advice.
The government tasked the service with helping consumers “ask the right questions, given their individual circumstances” and “understand their options in order to be able to make an informed next step.”
The Financial Services Consumer Panel (FSCP) criticised Pension Wise last week and stressed the need for consumers to be provided with independent advice and guidance arguing the service should be manned by advisers.
In its submission to the Work and Pensions Select committee’s inquiry on pension freedom guidance and advice, the FSCP said restrictions placed on the Pensions Wise service had brought its effectiveness into question.
Concerns were raised over the low numbers of people using Pension Wise, suggesting more transparency was needed in this area to determine whether the service is leading to better outcomes for consumers.
In terms of what Pension Wise will have to cope with in the future, Chris Curry, director at the Pensions Policy Institute, said the last five months was very different in terms of what had happened in the pension reforms to what will happen in the next five months.
He said: “Certain parts of the population are more likely to take advice. We also know there are strong behavioural reasons... they tend to default to what they know.
Rachael Badger, head of policy research at Citizens Advice, added people are seeing lots of scams of different kinds.
Michelle Cracknell, chief executive of The Pensions Advisory Service, said “Scams are like a balloon. We are increasing the volume of awareness.
“Every pension scheme has a complaints procedure for pensions scamming activity. Pension Wise complaints are low.”
The hearing came after Citizens Advice, which delivers face to face Pension Wise sessions in England and Wales, revealed 27.3 per cent of people who had this guidance also booked a Citizens Advice appointment for help on other issues.
Of those people who booked a separate Citizens Advice appointment, the most common reasons for seeking further help was benefits and tax credits (42 per cent), financial capability including help managing money (29 per cent), debt (14 per cent) and employment (4 per cent).
Citizens Advice argued Pension Wise could be more tailored to an individual’s personal circumstances including offering answers on issues affecting pensions such as divorce and debt.
ruth.gillbe@ft.com