The Low Income Tax Reform Group today (8 January) said there is an urgent need for a new service to give those on low income access to independent advice on pensions.
The service, which would be funded by the regulated financial industry, should establish a network of advisers who are able to give free professional advice to those unable to pay professional fees, the group said.
It recommended two new charitable enterprises, unlike some existing services such as Pension Wise, must be staffed by qualified financial advisers who would probably act on a voluntary basis.
LITRG recommended the new service would compliment, rather than replace, the government’s Pension Wise service.
Anthony Thomas, chairman of the campaign group, said people on low incomes should have “the same kind of access to quality independent financial advice as anyone else”, particularly when it comes to pensions and savings.
“It is disappointing that tax was only mentioned once in the consultation given that it should form such an important part of any financial decision.”
“The current Pension Wise service is limited because it offers only general guidance which is given by staff who may not be qualified financial advisers.”
Mr Thomas said it is “crucial” that individuals who are unable to pay professional fees have access to advice that is based on their individual circumstances, and which is given by fully qualified professionals.
“We do not want a service such as Pension Wise where it seems people are reading from a script.”
According to LITRG recommendations, the two new services should have local branches to offer face-to-face meetings to people who cannot access telephone or online advice, and national helplines.
It also recommended the advice should be independent and personal, taking into account their circumstances, such as their health, family commitments, assets, state benefits and their aspirations.
Mr Thomas said the services should be funded in the same way as the tax charities’ advice services are funded by the tax profession, with contributions from government, and could be overseen by a restructured Money Advice Service and the Financial Conduct Authority, to ensure it is regulated.
“Locally-based services supported by a national helpline as part of a network of similar services, including tax advice, will ensure that those unable to pay for financial advice receive the help they need.”
In October, Pension Wise was criticised by the Work and Pensions select committee for failing to help people make well-informed choices about their pensions.
Tony Catt, compliance officer at Peacehaven-based Anthony Catt Limited, said LITRG’s recommendation is a “good idea” and would be popular.
“Many people need advice on pensions and do not know where to go or who to trust.
“Advisers have had the problem that many pension queries do not generate income. The sort of people coming in with these types of queries do not want or cannot afford to pay fees.
“Therefore, there is little appetite for advisers to do this work on a commercial basis.”
He suggested the easiest way of setting this up would be as an extra service within a Citizens Advice Bureau because they are non profit making organisations with charitable status.
“The CAB already operates projects on a trial basis, and so would be used to having a pension specialist or adviser coming in to do this as a special project.”
katherine.denham@ft.com
