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TPAS estimates 25% take-up of pensions guidance next year

The Pensions Advisory Service estimates 25 per cent of retirees will take up pensions guidance next year, rising to 75 per cent in future years.

Speaking at a Pension Schemes Bill committee today, TPAS chief executive Michelle Cracknell said she expects 100,000 people to take up guidance next year.

The estimates jar with the Legal & General pilot, in conjunction with TPAS and LEBC, which saw only 2.5 per cent take-up from 9,000 people in April and May this year.

Cracknell called on the FCA and providers to do more to ensure savers are directed to guidance with a number of checks and active prompts.

She hit out at the amount of information received by retirees, saying it often left them overwhelmed and more likely to put off decisions or make none at all.

Cracknell said: “Our ambition is very high and that 75 per cent of people will take up the guidance. However, we don’t think that will be from day one. The calls we are receiving at the moment are people with a small defined contribution pension provision and pension elsewhere.

“It suggests there will be less interest in taking the guidance because it’s a smaller decision for individuals. Initially, our estimate is 25 per cent and then we will need to work hard to drive it up, especially as DC becomes a bigger element in people’s pension provision.”

Cracknell also fleshed out how guidance will work in practice, with an average at-retirement phone call currently taking 25 minutes and a guidance call next year taking 45 minutes including preparation.

She also revealed TPAS is recruiting 16 staff with more to come and dismissed suggestions there were not enough quality people.

TPAS will pay an average of £30,000 a year for staff with 10 years of pension knowledge and aptitude to speak to the public. They will also undergo a two-month training programme of written and verbal communication.

Speaking to Money Marketing before today’s session, founder Martin Lewis says: “I am worried where Citizens Advice and TPAS will recruit people from. With pension reforms there is a lot of need for qualified pension staff. There is no problem with CAB or TPAS doing it but I am worried whether there are enough qualified people available.”



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There are 5 comments at the moment, we would love to hear your opinion too.

  1. “The calls we are receiving at the moment are people with a small defined contribution pension provision and pension elsewhere”

    So not the type of person who would typically engage with an IFA then. (can’t afford/don’t want to pay the fees)

    And I know I am “banging on” about this but perhaps Michelle can explain why she thinks her recruitment campaign should be partly funded by a levy on advisers?

  2. brian weatherley 21st October 2014 at 2:57 pm

    How many unregulated sources of pension guidance are there? How will Joe Soap know which to use?

    MAS, TPAS, CAB ? But are they appropriate?

    MAS has been discredited and seemingly axed

    TPAS, by Cracknell’s assessment of usage by the general public, will now need to recruit at a salary of £30,000 p.a. (with the additional cost of DB pensions, DISB and not doubt bonuses for targets achieved not included) ) 10 staff with “10 years of pension knowledge and an aptitude to speak to the public” These are in addition to 16 existing staff making a total of 26 staff; therefore, assuming the same level of salary, costing £780,000 per year.

    What does that mean other than the obvious? Her inflated assessment is not empirically supported. She does not say how many of those who call TPAS might have circumstances which demand structured advice and not simply “guidance”; nevertheless, the higher estimated usage simply increases the staff requirement and is self justification for an ever expanding role task for TPAS and her own position. The question of the resulting financial costs together with office costs and associated expenditure is ignored . Very significant expenditure will be involved, BUT, who pays the bill?

    CAB: I agree with Martin Lewis regarding the quality of those it will be necessary to also recruit. Personally, I simply cannot agree to this idiotic proposal .

    Why does the govt not recognise the fact that those best qualified to provide ADVICE are IFAs
    SO, within the costs of TPAS, why not offer the IFA a token sum for every client dealt with successfully. The benefits? I think we all know the answer to that question. Meanwhile a continuing Public Info Service advert should direct the public to the IFA community for all advice regarding retirement income matters. Thereafter, the need for an expanded TPAS is eliminated together with the proposed use of volunteer organisations to dispense guidance in such matters.

  3. Yes, I’m banging on too, but SURELY the best and most straightforward mechanism to ensure that savers are directed to guidance (and, from there, on to advice) would be for the FCA simply to mandate OM as the default option That way, there’d be 100% take-up which, surely, would be a perfect result. Isn’t that what the FCA would like to see? What’s holding them back? Perhaps it’s the word simply.

  4. Well, if TPAS only need another 16 staff members to cover this and they are paying them £30K a year (say £50K with costs etc), then thats “only” £1.5m a year, which the £20m promised by the chancellor should cover for a while, no need for a levy on advisers then….

  5. In the scale of the amount of money wasted by government on far less important areas I think the potential £780k cost pointed out above (or even more, as should be spent) on this is chicken feed when compared to the potential result to the country of no guidance. If anything it should be expanded considerably as around 400,000 “retire” and take benefits each year. If hypothetically all 400,000 take up guidance (and assuming no other issues where a further call is needed, unlikely) that would be 400,000 times 45 minutes which is 300,000 hours. A lot of time to be covered. If, as discussed above, only 100,000 take it up that is still 75,000 hours and assumes no follow up or additional meeting.

    However I object to it being partially funded by a levy on IFAs as although in principle this is an area of good government it should be centrally funded due to the overall greater good. Where I also object is the idea that those at for example those at the CAB, good guys generally that they are, will be provided with sufficient understanding and training in a few months to understand the intricacies of pensions to cover all the issues required under suitable guidance. I have been an adviser for 20 years+ and still learn more every day.

    Guidance is generic information covering every potential option suitable to everyone. Advice is specific and tailored to your own personal position. One cannot make up for the other.

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