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Keith Richards: What Budget guidance could look like


Recognition in the Budget of the need for impartial advice was positive for consumers, given the challenges of making the right choices as a result of the reforms.

The Personal Finance Society responded to the FCA’s pre-Budget review of the annuity market by proposing a National Retirement Advice Service to provide universal access to impartial guidance at retirement.

Most people facing the task of turning their retirement funds into a sustainable income are  ill-equipped to make such vital decisions without expert advice.

In the past, annuities of some kind have been the solution, and they are likely to remain a key consideration in the foreseeable future as they remain the one financial product to guarantee a specified level of income for life.

Encouraging consumers to shop around is a positive thing, but only if they know what they are looking for. So, paradoxically, greater freedom of choice has simply added to the complexity of making the right decision.

A National Retirement Advice Service would offer a range of direct support, including affordable access to expert advice through a network of qualified advisers and the potential to introduce a fully-funded voucher system funded by redistribution of approximately 15 per cent of 2013 regulatory fines.

The service would dovetail with the Money Advice Service and the Pension Advisory Service in broad collaboration with other government bodies, the FCA, the pensions industry (ABI) and the advice profession.

This has the potential to change perception of the role and value of professional advice in general.

Keith Richards is chief executive of the Personal Finance Society



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There are 4 comments at the moment, we would love to hear your opinion too.

  1. goodness gracious 9th April 2014 at 3:27 pm

    So Keith estimates the costs at about £71 million to run a voucher system. How much would each voucher be worth for a single appointment with generic report?

  2. @goodness gracious if there are 500,000 people reaching retirement with money purchase plans and the system costs £71m (presumably per year) that would mean each voucher was worth £142. Did I not read somewhere today that the typical advisory cost for “at retirement” advice was about £680.

    Keith seems to be falling into the obvious trap though of calling the service The National Retirement Advice service when it is only offering guidance. Now where have we seen that mistake before? Hmmm?!

  3. Given that the government currently confiscates all regulatory fines to support injured servicemen (and women), any redistribution of regulatory fines to fund at retirement advice would require this policy to be modified, so the ABI and others will have to make official representations to the Treasury and/or No. 11. The idea seems sensible enough, so let us hope the government is prepared to listen and act accordingly.

  4. goodness gracious 10th April 2014 at 12:30 pm

    Nick, I doubt there are anywhere near 500,000 with mp pensions wanting guidance. The 500,000 is nearly the number of people reaching 65, a lot will have no pensions, some with fs pensions and the huge amount who are to proud/nervous/lazy etc. to seek advice or guidance.

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