The Government’s vision of its new Pension Wise service is that it will help those considering accessing their direct contribution pension savings to ask the right questions and understand their options in order to be able to make an informed decision on their next step.
We already know The Pensions Advisory Service will deliver the telephone guidance, while Citizens Advice will deliver it face-to-face. Consumers will have to make an appointment to speak to a “guide” on the phone or in person and will be asked to prepare ahead of the session by gathering relevant information to base discussions on. The exact parameters of these appointments are still being defined but initial user research indicates an optimum length of session will be around 45 minutes.
As you would expect, the guides will undergo training – accredited by the Chartered Insurance Institute – and must pass a test before delivering any service to consumers. We are told many of the recruits work within the industry already.
To help consumers reflect on choices and make informed decisions, a summary document will be provided that will include a record of options and what actions might be taken.
This document will not prescribe or rule out options and it will not recommend particular products – the service offers guidance only but will help consumers who wish to subsequently seek advice identify how to go about it. Hand-off to regulated advice is an important part of the process, particularly for consumers with complex or specialist financial needs.
The Money Advice Service is developing a directory for consumers to find a regulated adviser specialising in retirement planning. The directory will be used for signposting those identified as needing further advice during their Pension Wise session. It is likely to be extended to cover other areas of advice in the future.
Advisers meeting certain criteria can register now to be included in the directory. To be eligible, they must be active in the market and provide regulated advice for either at- or post-retirement planning. They must also offer, as their primary business model, advice that includes a personal recommendation.
But it is also worth remembering that clients approaching retirement should be thinking about more than just pensions.
The Department of Health and Public Health England are working to help raise public awareness of the Care Act reforms also being introduced in April and into 2016. A public information campaign is underway to help ensure those affected by the reforms – such as existing care and support service users, people approaching the point of need and carers – are aware of the changes and know where to go for further information. This will mean more people seeking advice about their long-term care options.
If advisers are intending to take advantage of this opportunity and do not yet have the long-term care qualification, taking action to reach the required standard now is advised.
Many advisers see pension flexibility as a route to acquire new clients. Time will tell if the Government’s goal of better-informed consumers will beat a path to advisers’ doors.
Linda Smith is former senior technical analyst at Apfa