It is hard to imagine, but not long ago there was a time of blissful ignorance when the industry was not obsessed with the words ‘guidance guarantee’.
But they are here to stay. The April 2015 implementation deadline is fast approaching, and there is an urgent need to work out how the Budget’s hasty promise can be delivered robustly.
The focus last week was on the question of who, rather than what – with growing calls for providers not to be involved in the provision of guidance, given the obvious conflicts.
Here’s the conundrum: schemes are not ready to implement the guarantee, with more than half of the National Association of Pension Funds’ members saying they will not be able to meet the deadline.
In addition, providers have their vested interests, and free facilities such as The Pensions Advisory Service and Money Advice Service will be either overwhelmed or reliant on the ordinary saver’s ability to provide detail on their various pension savings.
Illustration by Ben Jennings
As we have written before, pensions minister Steve Webb rowed back a little at our May defined contribution conference on how much of this guidance will have to be face-to-face, stressing the other modes of communication available.
The route of least resistance for the government would be to bolt the guidance function on to TPAS, for example, for a price. But this would still leave the policy with a couple of tricky hurdles.
The free guidance could be paid for out of a levy on all schemes, as has been suggested. But those with smaller pots could well end up subsidising the guidance for those wealthier retirees heading for drawdown or investing through retirement.
The second problem, which has been raised by mastertrust provider The People’s Pension, is that without a central register of pensions savings, this guidance could be rendered irrelevant.
“It is about trying to make things more relevant for people,” Darren Philp, its head of policy, told me. There does not currently seem to be much momentum in the industry behind such a register.
But if those delivering the guidance are to be both independent and useful, where are they going to get the information they need on ordinary people’s various pension savings to help them at this critical juncture?
Ian Smith is editor of Pensions Expert. You can follow him on Twitter @iankmsmith and the team @pensions_expert.
