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Standard Life UK chief: Insurers ‘well placed’ to deliver Budget pensions guidance

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.”

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Comments

There are 9 comments at the moment, we would love to hear your opinion too.

  1. Standard Life UK chief: Insurers ‘well placed’ to deliver Budget pensions guidance

    I think not ? judging from the comments made on the total lack of admin control with S/widows and others not to say S/Life itself !!!

  2. Just like putting Dracula in charge of the Blood Bank.

    Not a very flattering photo of Mr.Matthews – he looks like one of Nosferatu’s helpers – or was that the intention?

  3. Qualified operators to provide the Standard Life at retirement guidance? I assume they are telephone based operators. The allocated £20 million is for face to face advice. We will however need the providers to provide guidance at retirement and that guidance should be to get specific personal advice from a financial adviser. For those that are not adviser charge tolerant I hope Standard Life and the others are brave and honest enough to say for example “you need 50% in an impaired investment backed annuity and 50% in a simplified draw down option that ensures you always remain a 20% tax payer. We don’t provide these products so go to XX”. On my wish list. Need a fairy wand please.

  4. £20 mil to pay for 500k clients ths year would be £40 per head. That cannot be done f2f – it could barely be done on the phone!

    I predict a leaflet…

  5. He would say that. Standard Life giving unbiased advice some how I cannot see it. They need to make as much as they can and if it means trying to get rid of IFA’s I am sure they will try hard

  6. Let’s correct a few myths:
    – Its “Guidance” that’s being offered, not “Advice”. This is likely to cover a basic explanation of the customer’s options only. It is not going to provide individual advice. Most big insurance companies already provide this as part of their Non Advised service they offer customers

    – A Face to Face discussion will be available if the customer is willing to travel to the provider; this means it will effectively be Phone based;

    – The £20m set aside by the Treasury is to cover set up costs, and is not intended to cover the ongoing costs of maintaining the service. This cost will be met elsewhere (to be confirmed, but likley a levy on pension providers)

    – It will be difficult to prevent a Provider from giving the Guidance, as this could be considered a restraint of trade and/or Providers will get around this by setting up a wholly owned subsidiary.

    From what I can see, this is simply what MAS / TPAS already offer, with Insurance Companies doing everything they can to keep customers as far away from them as possible.

  7. @matthew

    followed by a riot!

  8. Two points to make here
    I am not being mercenary here, just a businessman. I couldnt care less who does what for whom as it wont affect me (and I predict it wont affect many advisers out there either. The great unwashed are not willing to pay for proper advice (and that is fine by me) then they really deserve what happens to them and to be honest I couldnt care less about that either. Those who are more “savvy” will seek advice to get income solutions and I for one will continue to charge what I need to charge cover all my reg responsibilites/fees/levies, PII, business costs and a reasonable chunk of profit. The rest of the public can do what they want.

    2nd point – Please do not get too concerned about this. Have a look at the timing of this and it doesnt take rocket science to work out this is PURELY a political move by the Chancellor in time for the elections, nothing else. All the guff he came of with in the budget is just smoke filled coffe house crap. If the Government had been serious about this, they would have have done something about the ridiculous restrictions placed on insurers as to what they can invest in for annuity business to be a success.

    Keep selling good advice and good solutions to those who want it and you will be fine, you will not want to deal with those who are looking to take the cash and leg it anyway. You probably havent dealt with them in the past so why worry now? (Dire Starits wrote a song called that btw)

    Keep it country guys (and girls)

  9. ‘Free guidance’ versus fee based advice. If anybody thinks this won’t entice at least a small % of HNW retirees from going down the free guidance route then they are kidding themselves. This will def impact advisers going fwd, so advisers better hope for the best.

    Personally, I don’t know why fee based retirement advice was’t made compulsory and all the hoo-ha over annuity outcomes would have gone away.

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