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Steve Webb: Guidance levy will be ‘modest’

Extra revenue from the millions of new pension savers created by auto-enrolment will render the guidance guarantee levy “modest”, pensions minister Steve Webb has told MPs.

Responding to a question from the MP for Reigate and Banstead Crispin Blunt – whose constituency includes offices for L&G, Just Retirement and Partnership – Webb said the boost to pension firms provided by auto-enrolment will far outweigh the costs of funding the guidance.

He said: “We’re auto-enrolling between eight and nine million new pension savers and these huge additional sources of revenue for the pensions industry are, relative to the scale of the guidance, modest.”

The FCA is currently consulting on the design of the guidance guarantee, which includes one proposal that could see advisers paying 30 per cent of the levy. The regulator also revealed there would be “no limits” on the number of times retirees could access the free service.

However, Webb said the guidance would aim to be a “budget” service that was “cost efficient”, rather than “full-blown, regulated, tailored advice”. He added that he had seen “no evidence that the sort of levy that’s envisaged will hamper entry into the market”.

Chancellor George Osborne pledged to give all savers the option of taking free, impartial, face-to-face guidance at the point of retirement in his March Budget.

Webb was responding to questions as part of a House of Commons debate on the Pension Schemes Bill, which also includes reforms to allow greater risk sharing between members of pension schemes and their employers.

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Comments

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

  1. Steve Webb needs to note that the Freedom and choice in pensions paper did not consult on the method by which the cost of the guidance service should be funded. The Government response to the consultation paper simply introduced the fact that Government would legislate to raise a levy on the financial services sector. FCA was then handed the task to deal with how it would be paid.

    It is not the role of Government to determine how advisory firms use their marketing budgets. Nor is it for Steve Webb to determine whether any such levy is “modest” or not. He is not being asked to pay for it, we are.

    Note his inability to state what the total cost is going to be each year a typical lack of evidence based decision making

    If the guidance service is a service for the public good let it be paid for from the general taxation pool.

    There is no evidence that the guidance service will result in an increase in those seeking advice. 1) users will see guidance as advice (The Chancellor said so) even if they are told it is not advice 2) The average pension pot for an annuitant in 2012 was under £50,000, frankly they cannot afford advice. Those who can already seek and pay for it.

    Steve Webb needs to stop talking nonsense and explain to his political colleagues why they should pay for this service not the financial services intermediary

  2. Hmmmm, so the government lends companies from outside the UK funding to set up NEST, restrict funds leaving NEST until the member is 55, then say that the industry should pick up the cost of their offer of FREE guidance as it will benefit from the additional savings. I know this is a little simplistic but please will someone start telling the truth.

    As for the guidance itself, modest, modest,!

    You cannot not simplify the current offerings, there are to a many options, risks and variables. Each individuals circumstances are different, levels of understanding vary and the will to understand lacking, so the only true guidance should be to seek advice. If this was the case, then we all might feel a little better in paying towards this so called free guidance.

  3. Funny I seem to be paying a lot of modest payments nowadays. What is the old saying about little acorns make mighty oak trees.

    The same could be said about modest payments. Each month they make the a big payments that some how have to be paid for.

  4. Steve Webb !! you are a @@@@@ moron !!! (sorry forgot to add an extra @)

    don’t need to add much more as Nick has said enough above !

  5. There is a very useful 4-letter word in use these days and Mr Webb is full of it. He cannot mention the levy amounts because he doesn’t know what it will be yet so who can he say it will be modest by comparison? How much does he think the FS industry is going to make on auto enrolment, given the charge cap being imposed on Providers? Any profit that does emanate from this is going to be years down the line. AS for the vast majority of Advisers, how much does he seriously think those involved are likely to ale from it? Yet we are going to have to cough up somewhere between 20-30% of the cost of running this. Its a very distasteful joke. Are NEST, The Peoples Pension and NOW Pension going to be included as levy payers along with the rest of us? If yes – how much and if no, why not? The government and regulators are slowly going to bring the FS industry to its knees before getting its head on the chopping block. I wish I was 8 years older as it would be a great time to hang up the boots.

  6. What “huge additional sources of revenue for the pensions industry”? This bozo will be trying next to convince us that black is white. Thanks to the government imposing its own ridiculously restrictive charging structure, how are AE schemes going to be anything other than massive money losers for providers foolish enough to offer them. Those who are will get burned even worse than they did by stakeholder pensions. Still, that’ll be their funeral. I shall steer well clear.

  7. This is why the country is in the state it is in – the bozos that run it equate turnover with profit.

  8. Kind of ironic that this item sits opposite the piece written by Phil Billingham about acquiring the right type of client and the right type of income. Steve Webb would I suspect would be incapable of running a profitable IFA firm

  9. Steve Webb would be incapable of running a pi55 up in a brewery to be honest.
    Lots of words but seldom any figures from this guy, lets just be thankful that he will lose his seat at the next election.

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