Guidance Guarantee Update
More information has been issued with regard to the Governments proposal to offer free impartial guidance at retirement to employee of Defined Contribution (DC_ Pensions. HM Treasury has announced that the guidance service will be called “Pension wise”. The Treasury has also today provided further details of the operation of the service.
In Summary, the developments so far are:
- Access to the guidance by members will be available via a website, by telephone from the Pensions Advisory Service or face-to-face at Citizens Advice Bureau.
- All official guidance will bear the new “Pension wise” logo.
- Guidance by telephone or in person will need to be booked in advance and the Government expects the booking service to be open from March.
- It will be a criminal offence to impersonate the guidance by using the same or a similar name and logo.
- The Financial Conduct Authority (FCA) has developed a framework for guidance providers and the standards they must adhere to. The Government’s initial view is that 45 minutes is the optimum length for guidance sessions.
- Both trustees and providers will have to ensure their retirement processes “signpost” their members to the Pension wise service. The FCA and the Pensions Regulator are working with other parties to develop material, including templates that can be used for this purpose but these are not yet available.
- Costs, other than for setting up the service, will be funded by a levy on regulated financial services firms. The estimated cost for 2015-16 is £35 million (to be confirmed in March). Any additional costs, due to increased demand in the first year of operation, will be met temporarily by HM Treasury but will then be recouped from subsequent levies.
Next steps:
The Government hopes to
pilot, test and make available all aspects of the guidance service before
April. Individuals can already register their interest in the service. Some of
those who intend to take their benefits shortly after flexibility becomes
available will be invited to take part in a pilot scheme with a view to helping
the Government refine the service before it is rolled out more widely.
A formal evaluation of the
service will be carried out before the end of 2015 to ensure it is meeting its
aims.
What is not yet clear is
how many times an individual will be able to access the telephone and
face-to-face guidance. Will it be only once or will those who have several
different DC pension pots be able to take up guidance every time they decide to
put a pot into payment.
While some information has
now been made available on the Pension wise guidance service, there remains a
lot of work for trustees and providers to do in order that members will
understand both the advantages of using the service and the limitation of its
remit. Standard material to help trustees and providers point members to the
guidance, with the information the member is likely to need for the session, is
currently being developed by the FCA and The Pensions Regulator.
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