From the blog: Defined contribution investors face risks and challenges both at and in retirement, against the backdrop of the widening UK advice gap and the lack of any reference framework by which to gauge what is feasible and realistic.
I therefore jumped at the chance when Michelle Cracknell, chief executive of the Pensions Advisory Service, invited me to see the call and web chat arm of its core service Pension Wise in action at their offices in Victoria.
During my visit, three things struck me.
The first was that despite the limited funding, the sheer level of knowledge, experience and, crucially, enthusiasm that resides within Pension Wise is super impressive.
All of those on the front line have more than 10 years’ experience of pensions and taxation in previous lives as pensions actuaries or independent financial advisers specialising in pensions.
There are also a number of very keen and well educated Generation Ys in the organisation (yes, some Gen Ys do “get” pensions) who do just as good a job as their baby boomer colleagues.
All are supported by a highly competent in-house technical function.
Skilled interviewers
Then there’s the number of bases covered by the ‘guiders’ as they’re called, notably in establishing the customer’s tax position and providing the requisite tax guidance in a simple and accessible way.
However, the skill with which they frame their questions to get to the nub of the customer’s financial position was what impressed me most.
One such case began with a customer enquiring about the options available to them in accessing their £10,000 DC pensions pot and ended up with the customer realising that they had £955,000 of deferred pension pots and a potential lifetime allowance issue to contend with!
That’s not to say there aren’t challenges. As with any publicly funded service, there are budgetary constraints.
It is apparent that on some days, TPAS are running at or above capacity, and that’s only with one in 10 of those at retirement using the service.
On the first Monday of November, over 650 calls were answered by around 45 guiders. Then there’s the inability to pass a customer’s case notes on to an IFA.
The elephant in the room though is that for a good financial outcome to materialise at retirement, people need the requisite guidance and nudges throughout the accumulation phase.
We also need to find a way to make advice more accessible for a nation of do-it-yourself investors.
While many challenges exist, Rome wasn’t built in a day. Crucially, what we have is an excellent base to build on.
Only by both the government and the pensions community catering for both DC pension investors and savers will more people achieve a good financial outcome and a comfortable retirement.
Chris Wagstaff is head of pensions and investment education at Columbia Threadneedle Investments
