The government wants to see the emergence of a new, national brand of officially approved ‘retirement pension guides’ who are required to operate to consistent, robust, well-enforced standards.
Treasury officials will work with The Pensions Advisory Service and Money Advice Service and an advisory board of experts to decide how best to provide the information and guidance.
It is expected that all those reaching state pension age will be signposted to a centrally-run telephone and on-line service. Individuals will call or register on line and can choose whether they want to just use web-based, telephone-based or face-to-face sessions.
The Financial Conduct Authority has published a paper which consults on the elements of the guidance guarantee for which the FCA will be responsible: setting and monitoring the standards with which guidance providers will have to comply, making and enforcing rules on how contract-based schemes signpost to the guidance services, and adjusting the FCA’s existing conduct rules to support the introduction of the guidance guarantee and in response to the new flexibilities.
It is understood there be new Pensions Bills in the Autumn. A Pension Schemes Bill, which will deal with the guidance guarantee, public sector pension transfers and pension flexibility and a Pension Tax Bill that will remove the restrictions on DC pensions, increase the flexibility of income drawdown and introduce measures to prevent tax avoidance for those who take money out of their pension funds and keep reinvesting in pensions to receive more tax relief. This Bill will be presented in August 2014.
Chancellor of the Exchequer, George Osborne, says: “It’s right to support hard working people that have taken the long-term decision to save for their future and I’m pleased that the responses we had to our proposals on making pensions more flexible have been overwhelmingly positive.
“We’re making sure that people have the right support to make their own choice about how best to finance their retirement and I’m pleased to confirm that everyone with defined contribution pension savings reaching pension age will get free and impartial guidance on their range of available choices at retirement.
“The government wants to ensure that guidance is trusted by consumers, and the vast majority, including most of the financial services industry who responded, said that consumers would not trust guidance given by a person or organisation with a vested interest in selling a financial product or service. It will bring together a range of delivery partners, including MAS and TPAS which already provide guidance and support to consumers.”
Government older person’s champion Dr Ros Altmann says: “This is a real game-changer and could be the start of a whole new industry. It will be entirely separate from any provider of at retirement financial products or services and focussed on financial education and financial planning and aims to help people consider the important questions they need to ask before making decisions at retirement – something that should have been in place long ago. However, it will not provide the answers – customers will be left to make their own decisions – so many may need expert independent financial advice to help them.”