Industry figures have predicted that early engagement and face-to-face guidance will drive take-up of the Budget’s promised guidance guarantee, as the industry debates how it will be delivered.
Last month, pensions minister Steve Webb sought to assure the industry that guidance could be delivered in less costly and time-intensive ways than a face-to-face meeting, such as websites and helplines.
But Tricia Collins, group company secretary at manufacturing company James Walker Group, predicted workers would engage best by meeting advisers in person.
“I don’t see how web-based or written training will help,” said Collins. “I think people would rather talk to someone, but that’s usually expensive.”
Collins said the use of web-based or phone guidance would lead to lower take-up of the guarantee, and also impede understanding of it among members.
“A huge proportion of the working population don’t work with computers,” she said. “A good half won’t look at communications and another half may not understand.”
Some industry figures have raised doubts over whether the promised face-to-face guidance would materialise, due to the huge scope and cost of delivering it.
Brian Henderson, UK DC and savings leader for Mercer, said: “I don’t know anyone who thinks [face-to-face guidance] is going to happen… the assumption is it will be diluted.”
Collins also raised concerns about funding for the guidance. “The most obvious mechanism is to let members pay via increased charges, which could then be levied from the scheme providers, but with the charge cap I don’t see this happening,” she said.
“If providers were allowed, there could be an additional contribution made towards guidance – that would be almost invisible to the member,” she added, but said the charge cap would create a “problem” for this approach.
Guidance may also be delivered via software tailored to individuals based on their retirement needs and savings.
“Where people don’t have access to an adviser, the digital guidance software can help them make informed decisions,” said Steven Cameron, regulatory strategy director at asset manager Aegon, which is developing a digital offering to provide guidance to users.
“There’s about 4m people who could be eligible [for guidance] in the next couple of months,” he said. “I believe a digital service will meet the needs in terms of ease of access.”
Cameron said digital solutions could also mitigate cost and capacity problems with members seeking guidance at numerous points throughout their career.
The industry has also debated the timing of this guidance as to when it would provide maximum value to the member. Henderson said a straw poll of 500 clients found only 8 per cent said guidance should happen at retirement.
“I’m torn between what’s ideal and realistic,” said Collins. “The ideal situation would be when you join employment you are given a talk about pensions and then every 10 years [after that].” Engaging with guidance 10 years before retirement is a realistic goal, she added.
