Blind faith: Treasury under pressure to come clean on Pension Wise

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The Treasury is facing mounting pressure from senior politicians, insurers and advisers over its refusal to publish data on the industry-funded guidance service Pension Wise.

The Government’s guidance offering came into being shortly ahead of pension freedom on 6 April.

But requests for basic information from Money Marketing on how the service is performing have repeatedly been blocked by officials.

In February, the Treasury said it would not publish information on forecast numbers for the service, claiming that any benefits of disclosure would be outweighed by “the risk that public exposure when preparing and finalising policy advice would make civil servants less likely to provide full and frank advice or opinions on policy proposals”.

The Treasury again spurned a Freedom of Information request from Money Marketing in early July, saying it was not required to publish information on customer satisfaction with Pension Wise because it can determine its own publication deadlines.

And this week, the FCA rejected a further FoI which asked how many firms it was investigating for impersonating the Pension Wise service, or purporting to offer free pension reviews in the aftermath of the reforms.

Transparency

The repeated refusal of the Government and the regulator to come clean over Pension Wise has now drawn the ire of influential politicans.

Labour shadow pensions minister Lord Bradley says the issue of transparency needs to be addressed so the guidance service is properly held to account.

Following his own request for information, Bradley was told by the Government that, as of 6 April, Pension Wise had handled more than 3,600 calls on the new freedoms.

Additionally, around 1,400 people had booked a telephone guidance appointment with The Pensions Advisory Service, and nearly 380 people had booked a face-to-face appointment with Citizens Advice.

Bradley criticised the response as “limited”.

He says: “So far the information on Pension Wise is extremely limited and we need to pursue that to make sure that consumers are getting the services that they need.

“The Government assured us that it would be completely transparent with these matters and it has to follow up that commitment, and we will rigorously pursue this on behalf of consumers.”

The Scottish National Party is also planning to ramp up pressure on the Treasury.

SNP pension spokesman Ian Blackford says: “This is very high on my radar. We are all for consumer choice but we need to make sure there is consumer protection and an appropriate level of guidance for all.”

The MPs’ intervention follows criticism from the Association of British Insurers. Speaking at the launch of the All-Party Parliamentary Group on pensions last week, director of long term savings policy Yvonne Braun said: “Why, nearly 100 days into the implementation of the policy, do we have provisional early data on everything except the performance and take-up of Pension Wise?

“The industry wants the service to succeed given that we fund it, and the more people use it, the better equipped they will be to make use of the freedoms.”

Adviser anger

The advice sector, which will have to stump up £4.2m of the £35m costs for running Pension Wise in 2015/16, has also expressed anger at the Government’s failure to publish information on the service.

Apfa director general Chris Hannant says: “People are only going to be able to help improve the service with some data about what’s going on, but how do we find out if we’re flogging a dead horse if we can’t see what is working and what is not working?

“We are already paying too much for it, and if you can tell already that there’s not too much interest in it from the general public then maybe we can rein in the budget and not provide so much.

“From what I have heard anecdotally there doesn’t seem to be advisers overrun with demand coming from Pension Wise, so that would suggest our argument that advisers would benefit less than forecast was right.”

Plan Money director Peter Chadborn says: “Pension Wise has been running for long enough now to see how it has been progressing in the early stages. And if improvements can be made it’s better to put this information out in the open so we can make changes now rather than having a review two years later on.

“But there needs to be enough transparency, and if the Treasury aren’t forthcoming with this information then they can’t be surprised if people get a little bit cynical about the whole process.”

Low take-up

Earlier this month, a Hargreaves Lansdown survey of 300 investors found just 10 per cent of the first cohort following the introduction of the freedoms had used Pension Wise.

And a YouGov survey of 1,649 over-50s – commissioned by Old Mutual Wealth for a forthcoming report – found only 1 per cent of people aware of the pension reforms have spoken to Pension Wise as a result.

However, out of 1,152 people members of workplace schemes run by BlackRock, 61 per cent have accessed Pension Wise.

Standard Life head of pensions strategy Jamie Jenkins believes the Government may be refusing to discuss the performance of its service due to a lack of take-up. In last week’s Summer Budget, Chancellor George Osborne the service would be expanded so that anyone aged 50 or over can use it.

He says: “My sense is the take-up has been lower than expected. If take-up was very high then they wouldn’t have capacity to expand Pension Wise.

“But it’s an important part of the framework and we, just like advisers, are partly funding it, so we do want to know if it’s being successful.”

In numbers

£4.2m

Adviser bill for Pension Wise in 2015/16. The guidance service will cost the financial services industry £35m in total

3

Number of Freedom of Information requests Money Marketing has so far had rejected from the Government and FCA on Pension Wise

£1.8bn

Amount of money savers took from their pension pots as cash between April and May, according to the ABI

TomMcPhail

Expert view

Tom McPhail, head of pensions research, Hargreaves Lansdown

The Government needs to be more transparent on where Pension Wise is, and is not, working.

They should by now have enough data to give us some first indications of how successful it is proving, and the Government has an obvious responsibility to publish as much information as it can around the successes and failures of the pension freedoms and in particular the Pension Wise service.

It’s fair to say that Pension Wise was always going to build from a low base, because they couldn’t publicise it and because it was a new service. Many people in the early days were only going to be interested in taking their money.

So no-one is going to criticise the Government because Pension Wise falls short of 100 per cent take up but we need to know what those numbers are.

And it is critical they are recording a wide range of data across the pension freedoms because without that information it will be impossible to make good policy in the future.

LowColin

Adviser view

Colin Low, managing director, Kingsfleet Wealth

It would be interesting to know where our funding is going, because after all we are paying for it. It would be helpful to know how often Pension Wise is being used and a degree of the satisfaction around that, although that might take a while to come out in the wash.

But I suspect 6 to 12 months might be the point at which you can get some early sense of that. In any normal business that’s when you would hope to see what progress you are making.