A proposed amendment to pension laws would force the organisations offering the Government-backed guidance service to assess clients’ wealth beyond the scope of pensions.
The free guidance sessions are a crucial part of the Government’s revolutionary reform package that gives savers far greater control over their pension savings. It aims to bring in safeguards from April 2015 when savers can cash in their entire pension pot.
Crossbench peer Baroness Greengross has tabled an amendment to the Pension Schemes Bill that would make it a requirement of guidance partners Citizens Advice and The Pensions Advisory Service to ask about “other potential sources of retirement income in addition to defined contribution pension schemes”.
This could include an assessment of housing wealth, savings, and investments, the amendment says.
The Bill will pass through the committee stage of the House of Lords – where the detail is examined line by line – on 7 January. The Government has said the guidance service will be in place before April, when the freedom and choice reforms take effect.
Current FCA standards for the service say a guidance session must “request information about the consumer’s financial and personal circumstances that is relevant to their retirement options”, but does not go as far as enforcing an assessment.
Under original proposals, advisers were set to foot up to 30 per cent of the bill for the service, which also received a £20m start-up payment from the Government.
However, in November the FCA backtracked and proposed halving advisers’ contribution to the levy. It said it was unclear how advisers would benefit from the service and that consequently they should pay less than other sectors that would clearly benefit, such as banks and life insurers.