Former Treasury financial secretary Mark Hoban says that only providing a one-off guidance session at retirement will not be enough to make sure people get the best value from their savings.
The Chancellor announced in March’s Budget that everyone will receive “free, impartial, face-to-face” guidance when they reach retirement from April next year. The commitment is designed to support radical liberalisations that mean anyone aged 55 or over will be able to take their entire pension pot as cash.
Speaking in a debate on the Queen’s Speech in the House of Commons yesterday, Hoban said if the Chancellor’s reforms are to be effective the guidance guarantee will have to offer more than a one-off session.
He said: “How will we ensure that people have good guidance at the right point in their life? Simply having guidance at retirement is not enough, given that people’s needs change over the period of their retirement.
“How will we gather together all the information about people’s pensions and savings so that we can give them good quality guidance? Will there be a digital service that people can dip into at will, or will advice always be face-to-face or on the telephone, which would be more expensive?
“How will we ensure that people take up the offer of guidance, so that they get the support and help they need to make the most of the new freedoms that we provide?
The Treasury’s consultation on the guidance guarantee says people who make use of the new flexibility around pensions will need “continuing access to support” and asks for responses on how guidance can be made available at “key decision points during retirement”.
Hoban said: “If we get the guidance process right, it will help more and more pensioners to make better use of the assets that they have accumulated over their working life and ensure that they have the income that they need in retirement.”