The Government’s guidance guarantee could collapse under initial demand and create a “lottery” of inconsistent quality as key questions remain unanswered just 11 weeks from launch.
After the National Savings and Investments website crashed last week an hour after pensioner bonds paying up to 4 per interest became available, worryingly scant detail is available from the Government on preparations to cope with an initial spike in demand for the service when it launches in April.
Experts argue a wide disparity in the experience and knowledge required of those delivering the guidance by Citizens Advice and The Pensions Advisory Service risks creating a two-tier service where the face-to-face element is of poorer quality.
Citizens Advice has advertised for two roles to deliver the guidance: agents and case workers.
For agents it is offering a salary of £18-24,000 per year, and says applicants must have good numerical skills and customer service experience. The advert says: “Some knowledge of pensions issues would also be an advantage.”
Case workers will deal with more complex scenarios and must have a successful track record in either financial capability or customer service. Citizens Advice says Associate membership of the Pensions Management Institute or Chartered Insurance Institute qualifications would be “a strong advantage”.
TPAS’ advert for those delivering telephone guidance, however, says applicants must have experience of working in pensions and specific pensions knowledge, including law and practice. It says working towards an APMI or CII qualification would be an advantage.
TPAS chief executive Michelle Cracknell says the organisation is recruiting for the role on a similar basis to that for its advisers, who are required to have 10 years’ experience in pensions and a qualification. It will expect guidance applicants to have around five years’ industry experience.
JLT Employee Benefits director Margaret Snowdon, who last year worked with the Pensions Management Institute to develop a guidance qualification, says: “The people delivering the service are paramount to its success and they should have experience and skills in dealing with different types of pensions. They should have a minimum of about three years’ experience and some form of qualification.
“At this stage it appears the telephone service may be of higher quality than the face-to-face service, although it will depend on the quality of the applicants and the selection process.
“Citizens Advice is risking taking on people who are not good enough, or spending a lot of time filtering out people who aren’t good enough. The whole guidance service could fall into disrepute as a result.”
Citizens Advice says a “high quality and rigorous” training programme being developed by the Treasury will ensure staff have adequate knowledge. It says its staff will receive the same training as those providing guidance at TPAS.
Citizens Advice head of service development Andrew Seager says: “Citizens Advice has extensive experience of helping people navigate complex issues and a strong understanding of how people make decisions.
“It is vital that staff delivering the pensions guidance have strong interview skills in order to understand people’s needs and respond appropriately, particularly when helping vulnerable people or those with complicated circumstances.
“A high quality and rigorous training programme will ensure all staff have the required pensions knowledge, whether they are delivering guidance face-to-face or over the phone. All staff delivering the guidance will have knowledge in accordance with the standards set by the FCA.”
A Treasury spokeswoman adds: ”All Citizens Advice and TPAS staff delivering the pensions guidance will receive intensive and detailed technical training prior to April 2015. They will be tested to ensure they have the necessary pensions knowledge before they talk to the public. They will also have access to a programme of continuous professional improvement.”
But Barnett Waddingham senior consultant and former TPAS chief executive Malcolm McLean says: “You can train people until you are blue in the face, but they need to have a starting point of knowledge. Citizens Advice seems to think that you can take people with absolutely no pensions knowledge and train them up in a few weeks’ time.
“Why is it asking for such a different level of pensions knowledge to TPAS? Arguably the face-to-face service is more difficult, because you are on your own in a room with someone.
“The quality of the service may improve over time, but those accessing it in the opening weeks will be guinea pigs.”
Standard Life head of pensions Jamie Jenkins says: “TPAS’ requirements are a good model and perhaps Citizens Advice feels unable to recruit people with that level of experience because it is not a pensions specialist. I would expect Citizens Advice to move to TPAS’ position in time.”
Guidance agents may also take the PMI’s new guidance qualification – the certificate in pension scheme member guidance – in due course.
The qualification is aimed at any individuals involved in helping DC and DB scheme members understand their options, including administrators and paraplanners.
The PMI says it provides both theoretical and practical knowledge on pension options, and includes an oral exam to test skill in dealing with enquiries.
A pilot of the qualification saw 23 individuals pass in December, including three TPAS employees.
PMI chief executive Vince Linnane says: “We have spoken to TPAS and Citizens Advice about using the qualification for their guidance staff and are waiting for their response. We are running a second pilot and are hoping more TPAS staff will take part.”
Others warn the service seems unprepared for a spike in demand in April, with the Treasury refusing to give numbers on the expected level of demand for the various aspects of the service.
Figures published by the Association of British Insurers last year estimated that under a “medium uptake” scenario, 200,000 people will use the guidance service per year. Its “high uptake” estimate predicts that 375,000 people will use the service each year.
The trade body estimated that 10 per cent of consumers will choose to access the guidance face-to-face, while between 60 and 90 per cent will choose the telephone service, with the remainder opting for the online service.
However, consumer research published by think-tank the International Longevity Centre-UK earlier this month found that face-to-face was the preferred method of receiving guidance. Its poll of 5,000 people aged 55-70 revealed 63 per cent of those with defined contribution pots would like guidance to be delivered face-to-face, and a further 20 per cent would prefer it online.
The online service is being built by the Treasury. The Government refused to give details on the development of the service when asked by Money Marketing, including staff numbers, expected demand, and measures to prevent the website crashing in the first weeks after launch.
A spokeswoman says: “The Government is working closely with stakeholders to understand and predict potential demand for the service, and to build sufficient and flexible capacity in the Pension Wise service to meet it.
“We are testing our website in line with industry best practice to make sure it stands up to very high levels of demand.”
Fidelity Worldwide Investment director Alan Higham says: “The most difficult aspect of all this to manage is the first spike in demand. You could potentially have 10 to 15 times as many people wanting to use the service in the first month.
“So instead of 40,000 people interested in the service each month, you could have half a million people wanting to use it in April.”
Higham says the Treasury is reluctant to publish figures on expected take-up out of fear of criticism.
He says: “I would imagine the Treasury has done some research on the likely demand and the important thing is to get the message out to people that it is geared up to deal with a certain amount of sessions from April.
“I think they are reluctant to give the newspapers a stick to beat them with, because if they say a set number they could get slammed for having poor take up.”
Cracknell refused to say how many staff TPAS is taking on, but insists the organisation will ensure it has “more than adequate” capacity when the service launches.
She says: “We are encouraging consumers to get in touch with us before April to help spread demand.”
Citizens Advice announced this week that it will offer guidance through 44 bureaux, with a “handful” more participating centres to be announced in due course.
It says each bureau will have between three and seven guidance staff, including at least one case worker. A spokeswoman says it is still determining how customers will be passed between agents and case workers. She declined to say how many staff are being taken on in total.
The Government’s champion for older workers Ros Altmann warns time is running out for the guidance service to be promoted effectively.
She says: “If Citizens Advice takes on people who are financially aware, then training them up is not an impossible task. But we don’t know what resources Citizens Advice has got, or what type of people they are taking on.
“We don’t know how many staff they will have doing face-to-face appointments, what hours they will be open and what they are going to offer in the session.
“That is a concern because I would like to see the service being properly promoted and trust being built up in the brand and we are not seeing that.”
Citizens Advice and TPAS job specs
Citizens Advice pension guidance guarantee agent
Salary: £18-24,000 per year
Essential requirements: Good numerical skills, customer service experience, ability to communicate complex issues.
Advantageous requirements: Some knowledge of pensions issues
Citizens Advice pension guidance guarantee caseworker
Salary: £22-30,000 per year
Essential requirements: Successful track record in financial capability or customer service, strong numerical skills, ability to communicate complex issues.
Advantageous requirements: APMI or CII qualifications
TPAS assistant technical specialist
Salary: £30,000 per year
Essential requirements: Experience of working in or with pensions, knowledge of pensions law and practice, experience of dealing with the public.
Advantageous requirements: Working towards an APMI or CII qualification
Head to head – will pensions guidance be up to scratch by April?
For: Michelle Cracknell, chief executive, TPAS
We are recruiting in the same vein as we currently do for staff. Most of the people who come to us need to have pensions experience and be in the industry already, and therefore will already have qualifications. We also require applicants to have a commitment to ongoing personal and professional development.
We have already been successful in our recruitment and are continuing to recruit.
The Treasury is working very hard to try and understand what the volumes are likely to be and dealing with the spike that might happen immediately after launch.
We are working on resource so we can make sure there is more than adequate supply at launch time.
Through our communications we are also trying to encourage people not to wait until April to contact us. From our experience on the helpline, those wanting to access the freedoms might not want to wait for the guidance, so they can speak to us now and be ready to access their money when the freedoms come in.
The other message we are trying to get out about guidance is it is a really good start but a lot of people may need regulated financial advice.
We signpost to regulated advice already, and we are waiting for instructions from the Treasury on where to signpost people from the guidance service, but it is likely to be the Money Advice Service’s at-retirement adviser directory.
Against: Malcolm McLean, senior consultant, Barnett Waddingham
One can feel reasonably happy about TPAS’s recruitment as they are offering a salary of £30,000 and asking for pensions experience and knowledge. But why is the level of pensions knowledge required and salary offered by Citizens Advice so different?
I also have concerns about Citizens Advice’s two-tier approach of having case workers to deal with more complex cases, as they seem to be assuming they will know which cases are more complex. I know from my experience that you only know how complicated a person’s affairs are once you have sat down with them.
We are 10 weeks away from the launch of the guidance and the providers need to step up a gear and in the case of Citizens Advice, think again. It is particularly worrying given the nature of the pension reforms, which will make the pensions market far more complicated than it was before.
Even with training, those delivering the guidance need a base level of knowledge to be able to explain the changes.
There is a risk of consumers coming away from Citizens Advice thinking they have got the answers when they have not.
The other big question mark is the numbers on supply and demand. The Treasury is still not able to say what level of demand they expect to receive.
We must remember that we are asking people to make life-changing decisions, and it is not looking good to have a service in place for April which can adequately support that.
Martin Gorvett, director, Provisio Chartered Financial Planners
At the moment, it looks likely to be a bit of lottery, depending on which channel you use. Maybe they could hire retired advisers but the wages would have to be higher. You want guidance to come from your peers, rather than someone who hasn’t gone through it themselves.
John Stirling, director, Walden Capital
Consistency is important, but sadly the consistency will be that the people giving the guidance are unlikely to have wide knowledge of the historic mess pensions are in. They won’t have enough knowledge to know what they don’t know. Web capacity is going to a huge issue for the first few weeks. You cannot develop a website which scales indefinitely for an unproven number of visitors.