Opinion  

Advisers take centre stage as pension guidance fears mount

Ashley Wassall

A common plaintive refrain in the cacophony of debate that has grown since radical pension freedom reforms were announced last year, is that a tight timetable will lead to severe shortcomings in protection for consumers.

A report in FTAdviser sister title the Financial Times at the weekend suggests this concern could prove well founded.

With just two weeks to go until savers are granted full unfettered access to their funds, the Pension Wise guidance service which forms the cornerstone of consumer engagement and which was publicly trumpeted by George Osborne is still not ready.

Individuals will be able to book a session two weeks in advance. Or not: appointments are still not being made available for the first sessions in two weeks that the Treasury insists will still go ahead on schedule.

The Treasury also revealed changes are still being made to the service, with an ‘insider’ claiming this includes the removal of risk warnings. Talk about “cutting it fine”, in the words of Richard Wilson, money purchase pensions policy head at the National Association of Pension Funds.

Mr Wilson similarly expressed in an article in the Times on Saturday that guidance may not be ready, warning that fraudsters could be set to cash in on a “vacuum” of information for consumers.

This is all extremely worrying. In the words of one expert speaking previously to FTAdviser, the Treasury has tried to cram three years’ work into around six months; given the likely scale of interest from consumers any shortfall in support could have catastrophic consequences.

According to data collated by transfer software firm Origo an aggregated war chest of close to £5.5bn has been held back in pension funds that would have been crystallised last year, while official Treasury projections suggest half a million retirees will access their funds from April.

That’s a lot of potentially poor decisions that’ll have major long-term consequences. And that’s where you, dear reader, come in.

In that Times article, the paper cited the alternative option of seeing a regulated financial adviser, making a case for your services which it is to be hoped many consumers will find compelling.

Noting that Pensions Wise is limited in that it cannot recommend a product, the article highlights the fact that advisers can offer this more direct support for an upfront fee.

Moreover, while advice for a relatively simple case is said to cost around £600, the article helpfully compares this to fees for a non-advised broker to buy an annuity, say. Commission of up to 3 per cent for an enhanced rate means even the average £35,600 pension would incur a charge of £1,068.

Given the apparent delays to guidance - and the fact that by all accounts it could be pretty ropey at first in any case - it is to be hoped that more people choose advice. This is as good a case for it as I’ve seen.