Pensions  

Defaqto: Only 5% will take up guidance guarantee

Another piece of consumer research has revealed a worrying lack of interest in the government’s at-retirement guidance, with only 5 per cent of respondents stating they would use it.

The research, commissioned by Defaqto and Partnership, suggested that this appears to be related to a lack of understanding rather than distrust, as when the 7,000 over 40s were asked if they were eligible for the guidance, 53 per cent did not know and 18 per cent did not think they would be.

When the concept was explained further, 31 per cent were keen to get involved, but 38 per cent remained unsure as to whether they would take up the offer, while 32 per cent were still not interested.

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The study is not the first to report on awareness and possible takeup of the guidance guarantee, with two studies published on the same day last month showing wild disparity between results.

Research from the Chartered Insurance Institute conducted among more than 1,000 UK adults within five years of retirement showed that 92 per cent might make use of the guidance.

A pilot project carried out by Legal and General and The Pensions Advisory Service earlier this year found that just 2.5 per cent - just one in 40 prospective retirees - might make use of the guidance.

At a recent Pension Scheme Bill committee hearing, Michelle Cracknell, Tpas chief executive estimated that 25 per cent of retirees will take up guidance from next April, rising to 75 per cent in the future.

Despite the confirmation of Tpas delivering telephone and ‘web-chat’ guidance and the Citizens Advice Bureau to deliver the face-to-face element, the Defaqto research found that 41 per cent of over 40s said they were not sure where they will go for guidance and advice on retirement planning.

As a consequence Defaqto has launched two new guides - one aimed at advisers and the other at consumers.

Richard Hulbert, insight analyst at Defaqto, stated: “The [adviser] guide outlines what these changes mean for retirement income and, critically, for advisers when supporting their clients’ decision-making processes.

“In addition, we have created a version of the guide that advisers can provide to their clients prior to advising them so they can gain a good knowledge of their retirement options.”

Andrew Megson, managing director of retirement for Partnership, said: “Helping clients to make smart choices at retirement has always been the core part of an adviser’s offering – and it is arguably even more important and challenging under the new pensions regime.

“Indeed, intermediaries are now faced with two parallel challenges: the need to compliantly serve more clients on a wider range of options and keep up with the gradual changes in legislation, regulation and product offerings.

“Balancing consumers’ new freedoms with the desire to ensure that they will never need to worry about whether they can heat and eat is likely to mean that people need blended solutions and these profiles highlight how they can work.”