Is there anyone else out there who feels, like me, that the Government’s strategy with regard to Pension Wise is becoming muddled, possibly even dangerously so?
In the past few weeks a number of issues have raised their heads, to the point where it is no longer clear what the true purpose of this advice/guidance service really is, or to whom it is intended to reach.
When the Chancellor announced his pension reforms last year, most observers and practitioners – other than the most paternalistic, who preferred the old annuity system because it delivered “certainty” over long-term retirement incomes – felt there were some positive elements to them.
The opportunity to access a slice of one’s pension savings more easily than before was welcome to many, even those unlikely to make use of it. It meant that in the event of a genuine emergency a pot of money could be available, albeit at the cost of having to hand over some of that cash to the taxman.
Of course, there were dangers to the process, as we all knew. It raised the potential of people asset-stripping their pension pots in search of a short-term financial fix, oblivious – or a least downplaying – the long-term consequences of such a move.
Pension Wise was meant to be the antidote to this. Offering a combination of online, telephone and face-to-face guidance, it was meant to provide the factual information that a soon-to-retire person might need when considering his or her pension options.
The problem with Pension Wise was always that, despite attempts to persuade the Treasury otherwise, it only offered generic guidance as opposed to advice. There is no direct pathway to the kind of person-specific advice which most of the 400,000 annual retirees will need when they finally stop work.
Moreover, as my fellow Money Marketing columnist Robert Reid explained in his recent piece, some providers are dragging their heels in terms of providing the kind of service their policyholders have a right to expect.
The result is some would-be retirees are obtaining information from Pension Wise, deciding on a course of action – hopefully the correct one – and then roping in advisers to make good on the admin omissions of providers themselves.
This puts advisers in an invidious position. When Robert chased up a provider on behalf of a client, was this an advised or an execution-only service that he was providing? And what happens if, based on Pension Wise information, a client makes what many might consider to be a wrong decision and then calls an adviser to help sort out the provider’s admin failures?
What is even more deplorable is the way the Treasury initially refused to give any kind of detailed information on early take-up of Pension Wise’s services.
Since then it has doled out a few snippets: Pension Wise has, we are told, provided 18,000 “guidance appointments” since its launch in April. But it declined to clarify whether these “appointments” were face-to-face meetings with Citizens Advice or calls to The Pensions Advisory Service.
More than 900,000 unique visitors accessed Pension Wise’s website, we are told. But again, there is no indication as to how long they browsed the site, how many pages they looked at, or what their “journey” was through the site. Critically, we have no idea about the actions they took after their visit.
A year or two, when the Money Advice Service was issuing its own dodgy statistics about users of its website, I was one of many critics who tore into the MAS for giving incomplete and possibly misleading information about its use. It looks increasingly as if Pension Wise is travelling down the same route.
To make matters even worse, even as it is unclear who is using Pension Wise and what they are doing as a result of it, the Government has decided the organisation’s service will be widened to a large cohort of users, no longer just those 55 or older but now anyone aged 50-plus.
I have nothing against a pensions advice service for all over-50s. I am totally in favour of anyone approaching retirement being able to access information, both general and person-specific about their retirement options.
I would be happy if Pension Wise acted as an “introducer” to the kind of genuine advice a client might need on how to make the last years count for them financially before they stop work.
But it looks instead very much like the Government is engaged in a strange form of mission creep. It is using Pension Wise in a manner for which it was not intended in order to take up the slack caused by a lack of potential users among those coming up to immediate retirement.
This lack of clarity needs to end. Last month the newly-elected and highly respected Commons Work and Pensions committee chairman Frank Field said he would be launching an inquiry into the effectiveness of Pension Wise. He is right to do so. The separate advice review announced by the Government this week will also need to shed light on whether guidance is working.
For the pension reforms to work proper advice must be made available and take-up of that advice should be high. Without it millions of pensioners risk an uncertain financial future in the decades to come.
Nic Cicutti can be contacted at firstname.lastname@example.org