Personal Pension  

Non-advice services must reveal charges: Altmann

Rules forcing so-called ‘non-advice’ services to disclose charges in the same way as advisers must now do are required, following the radical changes announced in the Budget, a pensions expert has said.

Fundamental changes in pension advice and saving products are needed to ensure success for the retirement revolution sparked by the Budget, Ros Altmann said, as she called for the launch of a ‘national retirement guidance network’ from April 2015.

In a 54-page report, sponsored by MetLife, Ms Altmann said a ‘national retirement guidance network’ should be brought in from April 2015 focusing on those about to retire and then this could expand into a wider ‘national wealth service’.

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This could be integrated into workplace pension auto-enrolment providing regular “financial wealth-checks” for all savers, she said.

Ms Altmann said: “To make the new freedoms work for individuals, a revolution in the provision of financial education, information and advice is required. There is a massive opportunity to be grasped by financial advisers and the industry.

Rules forcing so-called ‘non-advice’ services to disclose charges in the same way as advisers must now do are required, she added, arguing this would lead to no more “hidden commission”.

In addition, Ms Altmann said a system of specialist lower cost advice for people at retirement should be introduced, with the government increasing the current £150 a year tax allowance for employers who provide advice in the workplace.

She said: “These regulatory changes could have a dramatic impact on the advice industry and provide greater protection for customers who would otherwise not have access to the first-class service of an adviser.”

The report, titled ‘Flexibility in retirement - planning for change’, also called for innovation in retirement saving including new products such as lifetime pension accounts or 20-year retirement bonds with advanced life protection.

Dominic Grinstead, managing director of MetLife UK, said: “The UK has the opportunity to create a world-leading retirement and pensions system and Ros Altmann’s report provides a blueprint for how to achieve that.”

The report also outlined how new products that integrate long-term care funding into pensions and long-term savings could be developed, with tax incentives that would kick-start saving for social care.

MetLife estimates the unit-linked guarantee market is set to nearly treble to £4bn a year by the end of 2015 as the Budget reforms highlight the continuing need for certainty on capital and income.

Simon Smallcombe, managing director of Axa Life Invest, previously told FTAdviser, he expects this market to hit £3bn within the next two-years.

MetLife estimates the current market to be worth between £1.2bn and £1.5bn a year.