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Advice project could save 100m a year

Providing generic financial advice to people on low to moderate incomes could save the Government 100m a year in welfare payments, claims the Resolution Foundation.

It says the figure is based on modelling by Deloitte & Touche looking at the impact of providing low-level advice to the 15 million people who are on below average income but above state benefit levels.

It says that within 10 years of delivering the advice, the Government’s bill for pension credit could be slashed by 100m a year, with more people engaged with saving rather than relying on a state safety net, rising to 800m a year later in the centuryResolution Foundation’s report, A National Dividend: The Economic Impact of Financial Advice, suggests the move could increase the personal wealth of today’s young people by an average 60,000 by the time they reach retirement.

The report says an advice service would also help achieve policy objectives such as financial capability, reducing debt, tackling poverty and pension reform by underpinning the proposed NPSS.

It claims the financial service industry would benefit from better engaged consumers stimulating demand, an increase in sales and lowering distribution costs associated with prospecting for new business in this area.

The not-for-profit organisation is working on plans to provide generic advice thr- ough a national advice service as the Government prepares to launch a new 10-year strategy on financial capability this autumn.

Resolution Foundation chairman Clive Cowdery says: “The Government stands to make early savings of 100m a year in the welfare budget from investing in financial advice, with a profound effect on individual lives. Developing this national financial advice resource should be at the heart of the Government’s forthcoming strategy on financial capability.”

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