Personal PensionJun 30 2016

Pension Wise funding slashed by £100k

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Pension Wise funding slashed by £100k

Today (30 June) the Financial Conduct Authority has released its regulated fees and levies paper for 2016 to 2017, which states that Pension Wise funding will be slashed to £22.5m from its earlier projected figure of £22.6m.

The 2016 to 2017 cost of the existing pension guidance service and the secondary annuities guidance service is £29.9m, the same as the last projection in April 2016.

However, the final split between the two has changed, as laid out in the table below.

2016/17 Pension Wise funding requirement

2016/17 £m

2015/16 £m

Movement
Existing pension guidance service 28.039.1-28%
Secondary market for annuities guidance service1.9N/A-
Less 2015/16 underspend (7.4)N/A-
2016/17 funding requirement22.539.1-42%

The FCA proposed that the distribution of the allocation of the 2016 to 2017 Pension Wise funding requirement should be unchanged from the year before with the exact same distribution to advisers.

In terms of responses on the proposed pensions guidance levy, one trade body got in touch with the FCA to say it believed advisers, who pay 12 per cent, were paying too much.

The trade body highlighted recent data from Citizens Advice on how many people seek Pension Wise appointments, and commented the vast majority of pension pots - 75 per cent to 80 per cent - are less than £50,000 and therefore paying for full advice is unlikely to be economic for most consumers.

The FCA responded by saying that it reduced the allocation by 50 per cent to 12 per cent this year in recognition that financial advisers only benefit from the pension flexibilities and Pension Wise if consumers seek regulated advice.

It added that it was not able to substantiate claims in relation to the Citizens Advice data on the extent that consumers who use Pension Wise go on to seek regulated advice.

Earlier this year, it was announced that advisers were set to shoulder the biggest burden for regulatory costs this year, as the FCA’s budget swelled to more than half a billion pounds.

Taking over the regulation of consumer credit has pushed the FCA’s total budget for 2016 to 2017 to £519.3m, an increase of 7.8 per cent on last year, according to its fees and levies consultation, published on 5 April alongside its plans for the year ahead.

ruth.gillbe@ft.com