Charlotte Jackson, head of information and guidance at The Pension Advisory Service, has revealed the bulk of people approaching Pension Wise are expecting a windfall, but most are being sent back to get more information from providers.
Speaking at the FTAdviser Retirement Freedoms Forum today (24 September), the provider of the telephone-based pension freedom guidance service said more than 90 per cent of the people that contact Pension Wise have done some level of preparation before the conversation with her staff.
However, Ms Jackson said her staff typically find these savers only have a high level knowledge of one or two routes, more often than not based on “very limited sources of information”.
She added that most savers approaching the guidance service have defined benefit as well as defined contribution savings.
So, Ms Jackson told advisers gathered in Edinburgh that as a result, a lot of people come to the conversation thinking they can expect a bit of a windfall. “We do think that [windfall expectation] colours people’s judgements around what they are then looking to do with their money.
“About 90 per cent of the people we talk to have to go back to the provider because they do not really know what their policy has, or any special features contained in it.
Ms Jackson commented that this is a huge percentage. “As a consequence of the conversation, we will say you should go and have a conversation with your provider and talk about the options.
“Typically we see on the main Tpas helpline, what will happen is we will talk about the options, people will go back to one or two providers as they will typically have more than one pot and they will find that they will get different answers.
She added that the challenge is around how the guidance givers manage that expectation gap.
In terms of the drivers pushing savers towards Pension Wise, Ms Jackson said a huge number want to pay off their mortgage early and there is a big percentage of those who want to use the cash to fund buy-to-let, or help their children get on the property ladder.
Of the more random requests, Ms Jackson said they have had people wanting the cash for a ride-on lawnmower, paying for dental implants and sending cash to America to pay for a family member’s health treatments.
“We spend a big chunk of the time on the phone understanding their personal situations. I wouldn’t say it is a fact find in the way you do it. It is almost like a mini-fact find, so [we ask] things around their savings, debts, mortgage, health and long-term aspirations.
Ms Jackson concluded that her staff do not give people a next step in terms of particular products or types of decumulation route, adding that they just produce an output document.
emma.hughes@ft.com
