Advisers have warned plans in the Budget to provide face-to-face guidance to all retirees run the risk of biased recommendations from pension providers.
Chancellor George Osborne has said the Government will guarantee members of defined contribution schemes “will be offered free, impartial, face-to-face advice” at retirement.
He said: “I am providing £20m over the next two years to work with consumer groups and industry to develop this new right to advice.”
The initative will also be funded by an unspecified levy on providers and trust-based schemes.
But a consultation document published alongside the Budget confirms the service will provide guidance, not advice.
The paper says providers will have to offer guidance to DC customers at retirement, and asks for views on “the extent to which this guidance can be delivered by providers themselves without compromising impartiality”.
It says it recognises many consumers will want to seek further advice.
It says: “The Government will consider ways to ensure individuals are equipped with the skills and information to choose the adviser, broker or comparison site that suits their needs.”
Apfa director general Chris Hannant says: “The service needs to be impartial. At the moment people just roll over and take an annuity from their current provider – it is important that is not replicated in people being guided into a product offered by their provider.
“The customer journey may also be difficult if they need full advice following the guidance. We do not want customers to be passed from pillar to post – we would like to see more than customers simply being referred to an adviser directory.”
Informed Choice managing director Martin Bamford says: “In theory this could be valuable but I have a high suspicion the Government will screw this up. Impartiality and the transition to advice are very real concerns.”