View more on these topics

TPAS chief urges Govt to rethink ‘face-to-face’ pensions guidance plans

The Pensions Advisory Service chief executive Michelle Cracknell has urged the Government to rethink plans to offer face-to-face guidance to savers when they reach retirement.

Chancellor George Osborne stunned advisers and insurers by announcing a radical overhaul of the pensions tax system in the Budget last week.

Under interim reforms, Osborne has increased the trivial commutation limit from £18,000 to £30,000 from 27 March.

The triviality limit for private pension pots has also risen from £2,000 to £10,000, with individuals allowed to take three separate pots as cash instead of two.

The flexible drawdown minimum income requirement has also been cut from £20,000 to £12,000, while the maximum income a person in income drawdown can take has increased from 120 per cent of GAD to 150 per cent. 

However, in a move that will fundamentally reshape the UK retirement landscape Osborne announced that from April 2015 anyone aged 55 or over will be able to take their entire pension pot as cash.

The Chancellor also guaranteed that people approaching retirement will receive “free and impartial face-to-face guidance”, funded by a levy on providers and trust-based pension schemes. The Treasury will also provide £20m to “get the initiative up and running”.

Cracknell says: “The most important announcement from the Budget was the referral to guidance. The Government cannot open up the gates and not produce any form of guidance for people to access.

“It is absolutely possible to deliver guidance because TPAS is delivering it already. At the moment we deal with 80,000 customers a year and we have 20 people on the helpline, so you can easily see how that can be scaled up.

“But all the research we have done suggests this should not be done face-to-face because most people do not want that. It is not convenient, it can be quite intimidating and people tend to be a bit embarrassed about what questions to ask.

“We think the delivery channels preferred by the public would be things like webchat and Skype. That makes it really do-able and those are things TPAS does already.”

Advisers have warned making insurers responsible for providing retirement guidance could lead to bias.

Cracknell says: “Providers are not the right people to deliver this, either from the skill set and experience they have or the public perception about what is happening and who is giving the information.

“TPAS can be a delivery mechanism to make this happen. If we had to get in a car and see people one on one it would not be workable but I do not think that is what most people want.”

Investment Sense marketing manager Phillip Bray says: “I have no idea how this idea can possibly work practically. How do you create something with the scale to give 500,000 people a year face-to-face guidance in a year?

“If the Government means using online tools and workshop presentations then maybe that could work, but to throw £20m at it and hope it will be up and running in 12 months looks very optimistic.

“It is clearly the least thought through part of the reforms. It looks to me like this has been tagged on at the end because they realised the risks people will potentially be taking under the new regime.”

Rowley Turton director Scott Gallacher says: “Providing everyone who reaches retirement with face-to-face guidance sounds utterly unworkable.

“£20m from the Government to fund this will not even touch the sides so the industry will be facing huge extra costs if this actually happens.”


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm