Melinda Riley, head of policy, technical and advocacy for The Pensions Advisory Service, was challenged by an adviser at FTAdviser’s Retirement Freedoms Forum about whether her staff are making recommendations.
At the conference in Harrogate this afternoon (20 October), Ms Riley was asked about the case of a Pension Wise member of staff who repeatedly told an insistent caller that wanted to take a sum from his pension in one go that they could take cash from their pension over a number of years to avoid emergency tax.
When asked by the adviser whether Pension Wise had crossed the line by pushing the idea of taking tax free cash over a number of years, Ms Riley said “No.”
She said that her staff were merely explaining the options, that if someone takes all their money now, they need to think of the tax consequences.
“If I explain all the options around flexi-access drawdown and the fact you can take 25 per cent tax-free each year, have you thought about all those options?
“We wouldn’t ever say ‘that is what you must do’. We were just being a broken record. She was just repeating all the options back again until the penny dropped. It is information, you just keep explaining the options.
Ms Riley clarified that for savers with small pots, “We can take it a bit further, especially for people with small pots.”
When pushed by the adviser, who pointed out that the caller would then push ahead with that action as they would believe it was being advised, Ms Riley said: “We are just saying this is the situation you need to think about; your tax position.”
Following this exchange, FTAdviser asked Ms Riley whether Pension Wise checks that callers believe they have received advice or guidance.
She responded that the guidance service currently just asks callers if they were satisfied with the service received and does not check if they grasped they were receiving information and not a personalised recommendation.
“We get quite high levels of satisfaction, but we don’t think that is good enough. What we are trying to measure is how good that conversation was, what we are interested in is how rich that experience was.”
Ms Riley’s comments come after yesterday’s (19 October) publication of the Work and Pensions select committee report on pension freedoms. The committee said pension freedom is not yet operating entirely as it should and the apparent take-up of Pension Wise had been less than many anticipated.
The MPs also ruled that Pension Wise should give more personalised guidance incorporating an enquirer’s wider financial circumstances and improve its ‘static’ website to incorporate interactive features like, at least, an income calculator.
On the subject of take-up of Pension Wise, Ms Riley told more than 90 advisers gathered at FTAdviser’s event that there is still some work to be done on the customer journey. “It is not immediately clear or smooth enough at the moment, we would like to talk to many more people at the right moment.
“You can’t force engagement on people but all the services, ourselves, providers and advisers – when the consumer chooses to have a question about their pension answered we want to be ready to answer that straight away in a really joined up way – at the moment it can be really bitty.”
emma.hughes@ft.com
