Personal Pension  

Less than 25% will use Pension Wise: Portal Financial

Less than 25% will use Pension Wise: Portal Financial

Just less than 25 per cent plan on using the government’s new at-retirement guidance service when it is implemented from 6 April 2015.

Retirement specialist Portal Financial asked 501 over 55 year-olds about the type of pension they had, whether they planned to remove a lump sum from it, what the ‘guidance guarantee’ was called and whether they planned to use it.

However, no explanation was given as to the guidance service, so it was perhaps unsurprising that only 3 per cent knew it was called Pension Wise.

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Around 77 per cent have no intention of using it come 6 April, and people were less likely to use the service as they got older, with 32 per cent of people aged 55-59 planning to use it compared to just 16 per cent of over 65s.

Almost identical results were found when based on income, with the two exceptions being those earning between £70,000 and £99,999 a year and over £200,000 a year - 39 per cent of the former would use the service, while none of the latter would.

Jamie Smith-Thompson, managing director at Portal Financial, said that the results indicated that the government has not done enough to explain the presence or benefits of Pension Wise.

“A guidance guarantee was announced almost a year ago, and the Pension Wise website is now live, yet 43 per cent of our respondents think The Pensions Advisory Service is the name of the service rather than an existing organisation that will help in providing the guidance.

“Although guidance is not a substitute for regulated advice, we urge the government to increase awareness of Pension Wise so people approaching retirement at least know the option is there,” he added, stating that it “could prove disastrous if people make decisions without being aware of the range of options available.”

In November, Partnership found that just 29 per cent knew of the service, however this was more down to a lack of knowledge than a rejection of the concept, with 41 per cent stating ‘they did not know where they would go for guidance or information’ with regards to pension planning.

Only 5 per cent would look towards the guidance guarantee directly, while 18 per cent stated they would speak to a financial adviser and a further 18 per cent would look to online resources such as moneysavingexpert.com for help.

The study is not the first to report on awareness and possible take-up of the guidance guarantee, with all reports showing wild disparities.

A previous survey, also commissioned by Partnership as well as Defaqto found only 5 per cent of consumers would use the guidance guarantee, again this was due to a lack of understanding.

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

peter.walker@ft.com