Bosses at the organisations responsible for running Government-backed guidance service Pension Wise say they “will not break” under the weight of pent-up demand in April.
Hundreds of thousands of over-55s will be pushed towards Pension Wise from 6 April in a bid to boost the number of people shopping around for the best deals and to prevent the most basic retirement mistakes.
Since the Budget, the Treasury has added flesh to the bones of the guidance service. It has picked the partners and launched the official website while the FCA has published standards for guidance sessions.
However, the first cohort of new guidance staff are only just completing the Treasury-designed training course. And the FCA’s eleventh-hour introduction of extra protection for consumers has given the guidance partners and pension providers new considerations ahead of the service going live.
With just weeks to go until the new pensions freedoms come into force, we grill the chief executives of Citizens Advice, The Pensions Advisory Service and the Money Advice Service on their preparations for the initial surge of guidance customers in April.
‘We can’t break’
Around a third of a million people with defined contribution pension pots will be reaching 55 in April, according to estimates from the Association of British Insurers.
In addition, annuity and drawdown sales figures indicate thousands of people who would normally have already made a decision on how to spend their savings are delaying. Likewise, anyone aged 55 and over is eligible for Pension Wise sessions meaning TPAS, which will provide telephone services, and Citizens Advice, which is responsible for face-to-face sessions, are likely to see demand spike.
However, TPAS chief executive Michelle Cracknell, Citizens Advice chief executive Gillian Guy and Money Advice Service chief executive Caroline Rookes are adamant their respective organisations will be able to cope.
Cracknell says: “It’s not like a Take That concert or an NS&I pensioner bond – it’s not going to run out. We can’t break, we’ll have the available appointments and then it’s just a case of the timescale being reasonable.
“The way it’s been set up by the Treasury is volumes can be managed effectively through the initial call centre and we’ve got early sight of how many people want the appointments. There’s an eligibility filter and time lapse before the appointment. Internally we’ve got a system where we have availability for appointments and we’ll be doing extended hours and overtime as is necessary so people will be able to have appointments within a reasonable timescale.”
A survey of 1,500 over-55s published by Partnership this week found consumers are most likely to turn to online information (35 per cent), followed by face-to-face guidance (20 per cent) and telephone (15 per cent). A draft version of the website, designed with help from MAS staff seconded to the Treasury, is now live, while MAS has revamped its own site but has taken on no extra staff.
TPAS will not say how many staff it has hired in addition to its existing 40-strong team but Citizens Advice reveals it has hired 200 people so far, out of up to 400. In total there will be 50 delivery centres – staffed by between three and eight people – co-ordinating face-to-face meetings at over 500 locations. Scotland and Northern Ireland run their own Citizens Advice services.
Guy says: “We’re on track for being ready for April. I’m very pleased with how the recruitment has gone.”
None of the organisations will say how many people they expect to use the service. Last month, the Government rejected a Freedom of Information request submitted by Money Marketing on its estimates of Pension Wise take-up.
Commentators have raised concerns that maintaining consistency across all organisations and channels will be all but impossible.
TPAS is paying a salary of £30,000 for its Pension Wise staff, who are required to have five years’ pensions experience. Citizens Advice are recruiting staff to two different roles – agents earning up to £24,000 and caseworkers, who tackle the more complicated customer, earning up to £30,000. Caseworkers will be required to have “good knowledge” of pensions law and practice, and understanding of a “broad range” of pension arrangements.
Yet Guy says about 60 per cent of the new hires already have pensions experience and her organisation “doesn’t feel deficient”.
She says the discrepancy “could have been an issue” but tight controls around what guidance staff will be able to say evens this out.
She says: “There could be an issue if you weren’t being consistent about the content of the sessions but as we’re being consistent, that levels out people’s knowledge and experience. There’s not a huge difference between our pay structures except we have decided to have two tiers of responsibility. That’s because face-to-face has particular sensitivity and we want people to go out to locations where savers will probably be isola-ted and have to deal with those guidance sessions with a different set-up.
“We don’t feel deficient and I don’t think it matters that TPAS staff might be overqualified.”
All guidance staff at TPAS and Citizens Advice will undergo the same three-week Treasury-designed training programme. The technical pensions content has been constructed by the Chartered Insurance Institute “in line with the FCA standards”, says director of financial markets Steve Jenkins.
Candidates need to score 70 per cent or more to pass this part of the training. Jenkins says “softer skills” such as telephone manner and maintaining impartiality are being handled by the individual organisations.
Guidance sessions, whether over the phone or in person, will be kept to a strict 45 minutes, say Cracknell and Guy, at which point staff will refer users to the retirement adviser directory run by the MAS or to TPAS’ existing services. The content of the sessions has not yet been revealed but will mirror the six steps and five retirement income options in place on the website. Likewise, the “output document” that users will be given at the end of guidance session is yet to be revealed.
Under Treasury plans, savers will call the Pension Wise number and be put through to a Government-run call centre where they will be able to book appointments for either telephone or face-to-face sessions. This phone number has not yet been revealed, however.
People opting for a telephone or face-to-face meeting will be “encouraged” to wait two weeks so they have time to prepare, says Cracknell.
“It’s something I’ve spoken a lot to Steve Webb about – the more we can get people to plan in advance, the more they’ll get out of the conversation. Otherwise the danger is people come on the spur of the moment, ask a few questions and then ask if they can call back for another session. The plan is Pension Wise will be one session but TPAS is unlimited. So if at the end of the session there are unanswered questions because the individual needs to get more information, the signpost will be to get that information and then talk to TPAS about it.”
Unlike Citizens Advice, TPAS is a specialist pensions organisation and will continue to run these services in parallel to Pension Wise. Savers who need to speak to an expert urgently – if they suspect they have been caught up in a scam, for instance – will be pushed towards the normal TPAS helpline.
The MAS was overlooked in favour of Citizens Advice in delivering face-to-face guidance and instead has helped design the website. The org-anisation has also built an annuities comparison table and launched a retirement adviser directory.
Around 1,900 advisers from 900 firms have registered to be part of the directory and Rookes says the MAS is in discussion with “the big networks” to bring in advisers in bulk.
The MAS rolled back on its original requirements, which meant only firms that would accept any pot size and were “retirement specialists” would have been included. Rookes says she is confident the directory will have sufficient geographical coverage and will be able to provide a service for all savers.
Rookes says she “wasn’t at all surprised” by the Treasury’s decision to use Citizens Advice for the face-to-face sessions and insists the MAS will “not take a backseat on pensions in the short term”.
She says: “At the moment we don’t believe there’s a source of impartial advice around retirement to the depth and level we are delivering. In years to come, if others provide it then it would make sense to look at other gaps in the market but I don’t anticipate we’ll be reducing our offering in the short to medium term.”
Straying into advice
Guy says the tight structure of guidance sessions and the existence of the directory means staff will not stray into advice, while Cracknell says her team are experienced at staying the right side of regulation.
But Guy warns the public’s expectations need to be managed.
She says: “There’s been a lot of hype around this being advice and not guidance. People jumped to conclusions early on that suddenly we’d become pensions experts overnight and give advice from a position of not having experience but that is not the case. There is a worry savers have been fuelled by a false expectation.”
Paul Holiday, director, Greensky Wealth
I don’t think there’s going to be a bombardment of enquiries that will cripple any of the Pension Wise delivery partners. For advisers, it will raise the number of queries and the profile of pensions in general.
Patrick Connolly, head of communications, Chase de vere
It’s much easier to give consistency across a whole range of outlooks when you’re giving guidance and not advice because the information they are providing should be generic information. If that’s what they are doing and that’s what people understand they are doing, there shouldn’t be a problem. Pension Wise, for many people, will be a very useful service, at least it’ll make them think twice about doing the wrong things. If they’re after bespoke advice, hopefully there will be the right expectation that’s not what they are going to get. Advisers will get far more business as a result of the freedoms but as yet whether Pension Wise makes a difference remains to be seen.
The guidance providers in numbers
Citizens Advice (England and Wales)
Staff: Around 6,500 + 200 for Pension Wise, with around an additional 200 planned hires
Volunteers: Around 22,200
Funding: £167m in 2013/14, from a combination of Government grants, local government contracts, industry levy and fundraising.
Money Advice Service
Funding: £81.1m in 2014/15 (FCA levy)
The Pensions Advisory Service
Staff: 41 + Pension Wise staff (undisclosed)
Funding: £3.7m in 2014/15 (DWP grant)
*Treasury funding for Pension Wise not disclosed
We have worked closely with the Treasury and delivery partners on getting Pension Wise up and running, mostly focused on signposting. There are a couple of things we are still waiting for. One, certainly of interest to providers and advisers, is the output document from Pension Wise. Customers will be given a summary of what has been discussed and will sometimes hand that over to an adviser or a provider.
Likewise, we do not really know what the structure of the session will look like but the Treasury has said there will be consistency so you can draw quite a lot from the website.
I have every faith in Citizens Advice and TPAS to deliver the service effectively but achieving consistency between a web service and a service interacting with a person is going to be more challenging. The information available might be the same but, if a customer has a question, a website cannot necessarily answer that.
Pension Wise and the second line of defence rules are quite distinct. Providers will be talking about the risks customers face anyway and we called for the FCA to act so that warnings are given in a consistent way across the market and so there is a bit more clarity about what providers could do and say.
There is some concern about how the retirement risk warnings can be delivered in practice, given the lateness of the announcement.
If the warnings are delivered in a written process, it could be quite clunky and lengthy. If it is delivered verbally, it is still going to be difficult to ask customers questions and respond to their answers in a tailored way without straying into advice.
If a customer asks, “What should I do?”, it will be difficult to answer that question in a tailored way without giving advice.
Providers will be putting the risk warnings in place but implementing the rules in the time remaining is challenging. Warnings have to be generic to an extent because of that risk of giving advice. The rules need to work across the different channels and it will be difficult to do that in a consistent way.
However, we support a “best endeavours” beginning and the retirement risk warnings are a good example of that.
Rob Yuille is retirement policy manager at the Association of British Insurers