Standard Life UK chief executive Paul Matthews says providers could have a role in delivering Chancellor George Osborne’s pensions guidance guarantee.
The Treasury has set aside £20m to deliver Osborne’s pledge of “free, impartial, face-to-face” pensions guidance for all. The ongoing costs for providing the guidance will be met through a levy on the pensions industry.
However, it remains unclear what form the guidance will take or the role providers will play.
Speaking to Money Marketing, Matthews says providers are “well placed” to offer guidance to people who are approaching retirement.
He says: “At the moment we take customers through a process when they are coming up to retirement.
“We have a team of qualified operators who work through the options with the customers. Historically 7 out of 10 of our customers who go through the helpline will move to another provider, so we only look after 30 per cent of our existing customers with annuities.
“We have had meetings with the representatives from Government and the regulator and they are still working out how the guidance will work.
“I think a lot of big providers are well placed to provide the guidance but we need to work out if that is what the Government wants. One of the critical things we need to decide is how this links with independent financial advisers for those who are willing to pay for advice.”
Earlier today, Standard Life revealed annuity sales had dropped 50 per cent since the Budget announcement.
Matthews says annuity sales are likely to remain low for the rest of the year.
He says: “Virtually all of the customers with small pots below £10,000 have chosen to take their pots as cash since the Budget.
“People with large amounts are tending to defer until next year and as a result our annuity business is down about 50 per cent. We expect that to stay the same for the rest of the year.
“Over the longer term we expect the majority of people with larger pots will use an income drawdown product rather than buying an annuity.”