The Pensions and Lifetime Savings Associations's Joanne Segars welcomes the government's proposal for a single pensions guidance service, but says more needs to be done to ensure good outcomes for members.
But some of these were significant, including the merger of the Pensions Advisory Service and Pension Wise to create a new comprehensive pensions guidance service.
The Pensions and Lifetime Savings Association welcomed this decision, which we called for. However, the issue of funding remains. Funding should come from all stakeholders in the workplace pension sector, and these sources should be combined to fund one pensions guidance service.
Safe harbour signposting by employers and trustees to retirement income solutions that meet a set of quality standards would extend considerably the support available to those at retirement
Pension freedoms present savers with a wider and more complex range of at-retirement financial decisions than in the past, and a pensions guidance service is essential to making the new freedoms work for them.
It is important to understand how the current service is operating. This requires more detail on the effectiveness and efficiency of Pension Wise.
Defining good outcomes
Greater clarity is also needed from government and regulators on what constitutes good outcomes for savers under pension freedoms, allowing us to assess if the service is helping savers achieve them.
This will not always be straightforward. The second report in our 'Understanding Retirement' research series shows how pension freedoms have profoundly affected savers’ attitudes, leaving many fearful about making the right decisions with their pension savings.
The role of guidance is increasingly important – our research shows that although 61 per cent of savers felt they should be responsible for making the final decision about their pension, they also want support.
According to our research, those who have just started to think about what they might do have little experience of investment, low levels of defined contribution pension wealth and are unlikely to have a defined benefit pension.
Of those surveyed, 56 per cent do not plan to pay for regulated financial advice, 55 per cent do not plan to contact their employer and 47 per cent do not plan to contact Pension Wise.
Of those who have not sought financial advice, 21 per cent believe professional advice is too expensive and 16 per cent do not trust it.
These figures draw a stark picture where paid-for advice will never be the main solution, so guidance must play a central role in helping savers.
Pension Wise should fulfil this important role for savers. With continued support from government, industry and pension schemes it can become the norm for people to use the service.
But this must be coupled with fresh thinking. Safe harbour signposting by employers and trustees to retirement income solutions that meet a set of quality standards would extend considerably the support available to those at retirement.
We will respond to the government’s proposals to restructure the guidance service, ensuring the interests of our members and of savers are represented.
Joanne Segars is chief executive of the Pensions and Lifetime Savings Association
