Treasury slashes Pension Wise budget

Pension Wise jenga

The Treasury has slashed the Pension Wise budget by more than a quarter, with advisers’ levy for the service set to drop by £2m.

Documents published by the FCA alongside its 2016/17 business plan reveal the budget for the existing guidance service will drop 27 per cent, from £39.1m to £28.7m.

The 2016/17 funding requirement has been further reduced by a £7.3m underspend in 2015/16, although an extra £1.2m will be charged to levy payers to cover the cost of guidance on the secondary annuity market.

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As a result, the industry will pay £22.6m towards funding Pension Wise in 2016/17, down 42 per cent from £39.1m the previous year. Advisers will pay £2.7m, compared with £4.7m in 2015/16.

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The decision to cut funding for Pension Wise comes after Chancellor George Osborne announced plans to replace the existing guidance services provided by Pension Wise, The Pensions Advisory Service and the Money Advice Service.

The new body will be in operation by April 2018 at the earliest, the FCA says, and will be funded through an industry levy.

The Treasury could not be reached for comment.