Consumer group Which? has struck the latest blow against pensions providers wishing to deliver the guidance guarantee unveiled in this year’s Budget.
A survey by the consumer group found 65 per cent of people think advice given by pension providers would be biased; this increased to 76 per cent for those aged between 55 and 64.
Another survey by Which? found that while seven in 10 respondents said people should be able to do what they like with their pension savings, 76 per cent said they would need advice about what to do with that pension when they retire.
The Association of British Insurers had dealt a blow to some providers' ambitions with reported comments that providers should not deliver guidance until there is greater clarity on it.
A survey by the consumer group found that 65 per cent of people think advice given by pension providers would be biased, this increased to 76 per cent for those aged between 55 and 64.
Another survey by Which? found that while seven in 10 respondents said people should be able to do what they like with their pension savings, 76 per cent said they would need advice about what to do with that pension when they retire.
The Association of British Insurers had dealt a blow to some providers' ambitions with reported comments that providers should not deliver guidance until there is greater clarity on it.
Providers should step up and work with customers, advisers
David Macmillan, Aegon UK
The trade body said the guarantee should be delivered by not-for-profit organisations such as Money Advice Service or the Pensions Advisory Service until clear plans are laid out by the government.
The survey results come as the government closes its consultation on the pension reforms.
From the consultation responses we have seen, much debate has centred on the guidance guarantee, what form it will take for members and how much it will cost.
Who will provide it?
Going against the ABI view, provider Aegon has said pension providers that have invested in digital engagement tools are best placed to deliver the guidance.
David Macmillan, managing director at Aegon UK, said in a press statement: “Providers should step up and work with customers, advisers, government and the regulators to deliver the guidance guarantee, ensuring people have the support they need to get ready for retirement and make the right choices when they get there.”
However, Just Retirement disagrees with Aegon. In a statement, Stephen Lowe, Just Retirement’s group external affairs and customer insight director, said: “Given providers cannot meet the impartiality test in delivering the service themselves, we believe outsourcing the service to an independent utility provider would best serve consumers.”
Going digital
In its response to the consultation, Hymans Robertson said the current notion of guidance was too narrow and should be broadened.
The consultancy also said mass guidance would only work through some automation, an idea that has been echoed by many.
“Automation introduces a problem of bad algorithms, however, such as those that are biased towards products with higher profit margins. For society to trust automated guidance, the design of the process leading to particular products ought not to be controlled by the provider,” said Douglas Anderson, partner at the company. “The regulator should also be turning its attention to good governance of the models sitting behind guidance systems.”
A central register
The People’s Pension has taken a more negative view and said the reforms “will fail” unless a pensions register is created.
Jamie Fiveash, chief operating officer at The People’s Pension, said in a press release: “With the average individual changing jobs 11 times in their lifetime, the chance of having multiple pension pots is very high.
"Creating a register would give the provider of the guidance guarantee relevant information to see the whole picture and ensure savers are getting the best possible support in the difficult decisions they have to make. The register could also be the natural starting point for any automatic pension transfer solution.”
Counting the cost
The National Association of Pension Funds’ response among other things looked at the cost of delivering guidance.
Source: NAPF
Earlier this year, Joanne Segars, chief executive of the NAPF, told Pensions Expert that the timescale for delivering the reforms are “frighteningly short”.
With just 10 months to go until the guidance guarantee is due to be implemented, someone will be left holding the hot potato when the reform is rolled out.
