The Pension Wise service will be available free of charge to anybody over 55, the age from which people are able to access their pension savings.
The government has funded the initial set-up costs of the service, but ongoing costs will be paid for through an industry levy.
Following a consultation last year, Michelle Cracknell, chief executive of The Pensions Advisory Service, says it was decided financial services firms that benefit from better informed and more engaged consumers should fund the guidance service.
Financial Conduct Authority-regulated firms deemed likely to benefit most, include pension providers, investment firms, annuity providers and financial advisers. Fees will be applied across fee blocks in the same way as other regulatory costs - with one exception.
Arguments from advisers that they will not benefit as much as most, as guidance will be considered sufficient by a large swath of mainstream consumers, have been heeded and the sector will pay a proportional bill of around half of the other fee blocks.
Deposit acceptors such as banks, life insurers, portfolio managers and managers of collective investment schemes will each pay 22 per cent of the total cost of Pension Wise. Advisers are expected to pay 12 per cent of the cost of Pension Wise, amounting to an initial levy of £4.2m.
The total initial estimate for the FCA-administered levy for Pension Wise in 2015 to 2016 is £35m. Richard Wilson, policy lead for defined contribution at the National Association of Pension Funds, says this will be confirmed in March 2015 in the FCA’s fees consultation paper.
Pension schemes will also contribute indirectly to the cost of Pension Wise through The Pension Regulator’s general levy, which is partly used to fund Tpas, says Darren Philp, director of policy and market engagement at The People’s Pension.
