Nearly 10 months have passed since George Osborne launched his groundbreaking announcement that will change the face of the pensions market for a long time to come.
Not least the option for those aged 55 and over to delve into their defined contribution pots as and when they see fit rather than having it tied into an annuity.
To guide those approaching retirement on the options available to them from April, the government unveiled a new free impartial guidance service, complete with a logo, recently branded Pension Wise.
“We want people to be empowered to make informed and confident choices,” is the government line on the aim of the new service, voiced by Andrea Leadsom, economic secretary to the Treasury.
She added: “Pension Wise: Your Money. Your Choice is the brand name for the impartial guidance service we are building.”
It will be run by the Citizens Advice Bureau and the Pensions Advisory Service. Any imitation of the service will be made illegal through the Pension Schemes Bill.
Those eligible will be able to get help online, over the phone and face-to-face about what they can do with their pension pot, the different type of pensions and how they work, and what is and what is not tax free.
The guidance sessions will be approximately 45 minutes long and be piloted from February. Consumers can already register their interest to use the service
The creation of the new service follows the announcement by the chancellor that the government will provide access to free and impartial guidance on how to make the most of the new pension freedoms.
Pension Wise has finished the application process to find the brightest and best to form a team of agents and case workers to provide face-to-face pension and retirement information and guidance – the latter will deal with more complicated pension cases.
Agents will receive an annual salary of between £18,000 and £24,000 and case workers can expect a wage of between £22,000 and £30,000.
According to the job descriptions posted by CAB, both roles require a host of essential skills including numerical skills to understand financial matters and proven ability in financial capability or consumer advice generally.
However, competency in conducting interviews tops the list of requirements, according to a CAB spokeswoman.
She said: “It is vital that staff delivering the pensions guidance have strong interviewing skills in order to understand people’s needs and respond appropriately, particularly when helping vulnerable people or those with complicated circumstances.”
Those recruited will receive rigorous training and deliver the pensions guidance as developed by the Treasury, TPAS and CAB, she added.
She said: “A high-quality and rigorous training programme will ensure all staff have the required pensions knowledge, whether they are delivering guidance face-to-face or over the phone.”
Staff will be assessed to ensure they meet FCA standards before they start offering guidance to the public.
Though unable to disclose the number of people who applied for the vacancies, the spokeswoman said they were pleased by the “very significant” turnout.
CAB has also unveiled 44 centres across England and Wales that will offer the face-to-face guidance.
Each delivery centre will have between three and seven paid members of trained staff providing pensions guidance – though exact numbers of employees will depend on local population and size of area covered by the centre.
The South East of England and Wales are the regions boasting the most centres, with seven, followed by the North West and the West Midlands – each with five.
There will be four centres in the eastern and south western parts of England and Yorkshire and Humberside, three in the east Midlands and London, and only two in the North East.
Tom McPhail, head of pensions research at Bristol-based Hargreaves Lansdown, said the geographical coverage appeared “painfully thin” though he acknowledged that setting up face-to-face guidance in time for April was always going to be a challenge.
He added: “In reality, I think take up of the face-to-face service is likely to be very limited, with the vast majority choosing to go online or over the phone instead.
“Past experience of investors’ failure to take up their rights to shop around for a retirement income shows that even relatively small barriers can be enough to deter people from taking action, even when it is in their best interests. An hour’s drive to get access to the face-to-face service will probably be more than enough to put many people off.”
However, a spokeswoman for CAB said the body would be planning a host of outreach programmes across the country in community venues to ensure that the service was accessible to all.
Citizens Advice Scotland and Northern Ireland have also confirmed plans to deliver the service across the respective areas, though they are working to their own timetables.
The Treasury has estimated that the new service will cost £35m over the net financial year – which starts in April.
Financial advisers will be expected to foot 12 per cent of the cost which equates to £4.2m.
This charge has hit a raw nerve with advisers, including Robin Sainty, chartered financial planner at Norfolk-based Nurture Financial Planning.
“I think that the politicians need to understand that we are business people who work hard to earn a decent living. It is annoying when politicians use you to make themselves look better. It leaves a bitter taste and I feel the majority of IFAs feel the same way.”
The government has pledged to cover any costs above the levy value itself in the first instance, and reclaim these from the subsequent year’s charge.
Deposit acceptors, life insurers, portfolio managers, and managers of collective investment schemes or pension schemes will be required to contribute 22 per cent respectively to cover the rest of the cost.
The initial set up costs for the service were covered by a Treasury loan.
Scott Mullen, director at My Pension Expert, recently came out in support of the new service.
He said: “The new freedoms on offer will open up greater amounts of choice and flexibility, which no one can dispute are good things.
“It is our hope that through Pension Wise more people than ever will be motivated to seek financial advice to ensure they achieve the full potential from their pension fund.”
Another cause for concern explored by Mr Mullen and echoed by Justin King, chartered financial planner and registered life planner at Dorset-based MFP Wealth Management, involves the distinction between guidance and advice.
He said: “It is all very good giving them the information, but their understanding of the information and what action an individual will take from this guidance is not tested.
“Some people may choose to completely ignore the advisory process and make decisions based solely on the guidance offered, which is obviously not the best thing to do.”
As the industry gears up to what promises to be an unpredictable yet exciting April in the retirement industry, support to guide those over 55 approaching retirement through the many changes is paramount.
Whether the guidance service will be a success remains to be seen.
Myron Jobson is a features writer at Financial Adviser
Key facts
Pension Wise has been launched with the aim of empowering people to make informed and confident choices over their pension.
It will be run by the Citizens Advice Bureau and the Pensions Advisory Service.
Financial advisers will be expected to foot 12 per cent of the cost.