A financial services education firm has stepped forward stating it could provide a model to deliver the government’s pension guidance guarantee announced as part of the recent Budget reforms, outling a vision for a £32m-a-year service whose cost would be met by pension schemes.
The ‘guidance guarantee’ is currently in a consultation phase, and has pledged to offer individuals approaching retirement “free and impartial face-to-face guidance to help them make the choices that best suit their needs”.
It is set to fall on providers to facilitate the service, however many have warned that providers will not be able to offer impartial advice.
Speaking to FTAdviser, Jonathan Watts-Lay, director at Wealth at Work, which provides financial education to employees of big firms on their pension options, said his firm and others like it are well placed to offer a service along the lines of the model they already operate.
Mr Watts-Lay described a service that would be delivered potentially to groups in a seminar-style setting, suggesting the cost could be around £50 per head. Around 650,000 people are expected to retire every year according to official data meaning this would cost roughly £32.5m every year.
Mr Watt-Lay dismissed industry suggestions that the guidance should last 15 minutes, stating that its shortest session it currently offers is three hours, with the longest being six hours. He believes at a minimum a one-hour group seminar could be sufficient, or a 30 minute telephone call.
He said: “As long as the funding is in place, we could provide this, as we have the infrastructure in place. I think £50 per head would cover costs and pension schemes should pay for this.
“If sessions are held in a single location for a day, two in the morning and two in the afternoon, with around 20 people at each, £50 per head would cover all costs.”
Mr Watt-Lay added that a system would also have to be in place to ensure that everyone did receive their guidance guarantee prior to retirement. He suggested using national insurance numbers could ensure everyone received their guidance.
He referred to recent guidance from The Pensions Regulator, which he said could work in tandem with the government’s guarantee.
Last November, the regulator published new guidelines to help trustees to meet the standards of practice that it believes forms the basis of quality governance and administration, which suggested intervention with savers between five to 15 years before retirement.
Trustees should, it said, explain “lifestyling and its advantages and disadvantages and when it is likely to be adopted or has been adopted”.
Mr Watt-Lay said: “If trustees are following the guidance then the guidance guarantee given by them would only need to be a year before they make an immediate decision. The two can work together very well.”