Personal Pension  

Consumers do not want guidance delivered by providers

Around 83 per cent of over 55s believe the pension ‘guidance guarantee’ should be impartial and independent from any pension provider despite the government pledging that this will fall under providers’ remit.

New research from MGM Advantage showed that only 5 per cent of the sample of 2,367 over 55s thought impartiality was not an important characteristic while 12 per cent ‘did not know’.

Nearly a quarter of respondents to the research would trust an existing organisation like The Pensions Advisory Service to provide the service. Around 23 per cent would also trust professional financial advisers.

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MGM Advantage’s research also revealed that trust could play a large part in the success of the guidance guarantee.

Organisations such as the Citizens Advice Bureau and Tpas proved the most trustworthy, according to the over 55s, when they were asked who would be able to best help them understand pension options when they retire.

Michelle Cracknell, Tpas chief executive, previously told FTAdviser that Tpas “would love to” provide the guidance. Tpas said the guidance could be delivered in three ways - helpline, webchat and a virtual face to face session.

MGM’s research also revealed calls for the possibility of a new government agency were quite high at 21 per cent, whilst trust placed in professional financial advisers was placed at 23 per cent.

However, only 12 per cent of respondents suggested they thought they could trust their existing pension company to provide such a service.

Similarly, many pension providers are loathe to take on this responsibility, feeling that it will be difficult to remain impartial when delivering guidance.

Andrew Tully, pensions technical director at MGM Advantage, said: “As the industry debates the pros and cons of the new guidance service, it seems trust will be crucial in making it work effectively.

“What comes across strongly is the overwhelming number of people from all age groups who thought the service should be impartial and independent from pension providers. This is important because we are building a service not only for the retirees of today but also for future generations.

“While guidance can help understanding and narrow down options, it is also crucial there is a clear hand-off to financial advisers when necessary.”

Ms Cracknell added: “The guidance service being launched as part of the Budget is a big opportunity for us to win over the ‘hearts and minds’ of people so that they become more engaged in planning for their retirement.

“We know from our helpline that people struggle with retirement decisions. An independent organisation like Tpas provides a great bridge between people receiving information from their providers and the next steps that they need to make, which may include finding a financial adviser.”