Steven Cameron, regulatory strategy director at Aegon UK, said when Pension Wise was set up it had a very clear and worthy purpose – to offer free impartial guidance to those aged 55 and above considering the new pension freedoms.
Since then, he said Pension Wise’s remit has been expanded to those aged 50 plus.
Then, in December, HM Treasury announced Pension Wise is to offer guidance to those who are considering selling their annuity on the secondary market.
Most recently, responding on pension transfers and early exit charges, HM Treasury announced a further expansion of Pension Wise’s portfolio, this time to offer guidance on transfers.
While not clear, Mr Cameron said this will presumably apply only to those aged 50 plus considering the new pension freedoms.
In December, economic secretary to the Treasury Harriett Baldwin gave further details on the secondary annuity market set-up from 6 April 2017, confirming plans to extend the guidance service to cover those wanting to cash in existing annuity contracts.
Then earlier this month, the government published its response to the pension transfer and early exit charges consultation, noting that Pension Wise will develop “new content on the transfer process”, including information on likely timescales, what customers need to do and greater clarity on whether financial advice is required.
Mr Cameron said that while these extensions may benefit individuals reluctant to seek advice in such areas, it does beg the question of where next and also, which parts of the industry should be paying for the service.
“We hope the Financial Advice Market Review will create new opportunities for cost-effective models between ‘no’ and ‘full’ advice. This would then be the time to re-evaluate where public financial guidance services such as Pension Wise should be targeted.”
Tom McPhail, head of retirement policy at Hargreaves Lansdown, said: “All aspects of Pension Wise, including its levies, should remain under ongoing review until some semblance of stability has been restored to the pension system; this could take some time yet.”
The Association of Professional Financial Advisers’ director general Chris Hannant, said the FCA should looks at the issue of funding Pension Wise again in light of new data.
He said: “My understanding is that they are doing so at the present.”
When FTAdviser asked the FCA and Treasury for more information, both stated that it was up to the other Pension Wise partner to comment on funding the guidance provider.
Back in November 2014, the regulator laid out how levy payments would fund the guidance service, with the equal weighting across all levy categories being waived for the intermediaries, meaning their bill was effectively halved.
Apfa welcomed this decision, but suggested that it should go further and reduce the share allocated to advisers by 75 per cent.
Deposit acceptors, life insurers, portfolio managers, and managers of collective investment schemes or pension schemes pay 22 per cent, while advisers only pay 12 per cent of the total cost.
The following January, the Treasury revealed that advisers would pay £4.2m towards the pension freedoms ‘guidance guarantee’ levy, with the overall initial industry levy for 2015/16 set at £35m.
