DrawdownDec 11 2018

Mas drawdown tool to launch in March

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Mas drawdown tool to launch in March

A beta version of the Money Advice Service (Mas) drawdown comparison tool for non-advised consumers will be launched in March, senior policy manager Teresa Fritz revealed.

However, Ms Fritz said it won't include investment fund fees, as that could be seen as a product recommendation and considered advice.

Instead, it will include the set-up fee, the annual product charge and the switching fee, Ms Fritz said today (December 11) at a Westminster Business Forum seminar in London.

In its retirement outcomes review published in June, the FCA called for a drawdown comparison tool to be built in conjunction with Mas, which is soon to become part of the new Single Guidance Finance Body.

This will allow non-advised consumers to make like-for-like comparisons of drawdown products, the regulator said.

Steps to create a drawdown comparison tool had already been outlined by the Association of British Insurers (ABI) in April, which called for joint action from the pensions industry and regulator to bring the tool to life.

Ms Fritz said: "It is probably the most difficult tool we ever tried to build. The first iteration will be beta, we will have lots of learning from the consumers which will use it.

"This first version will be very far away from what we think the final tool will look like. One of the things we are doing in nudging people all the way through to easily access guidance, first of all, but also regulated advice."

She explained that along the way the consumer gets contact information for Pension Wise and The Pensions Advisory Service (Tpas).

She said: "Once we get them to someone like Pension Wise, then it is much easier to get them to the next step of regulated advice, because they already started engaging, they found out some information, and a Pension Wise guider knows how to take them to that next step."

The tool is also being designed to be able to be connected to retirement pathways, once these become a reality.

In June, the FCA announced that it is planning to force providers to offer their customers easy to access ready-made drawdown investment products, in a bid to prevent them from sticking their money into cash.

Ms Fritz said: "I would say the biggest problem we have is to try to get consumers to understand that they aren't just accessing their tax-free cash, they are buying a product. They are making a decision to move their funds into a different product."

The tool will also include an income estimator for those people who start drawing their pension regularly, which will show them how long their money will last, she concluded.