I have to admit to having grave concerns following the government’s announcement last week, that as part of the pension reforms, everyone with a maturing pension pot from April 2015 will be offered ‘guaranteed guidance’.
Don’t get me wrong, I welcome with open arms the prospect of good quality, independent advice being available for one and all but my very real fear is that this is not what is going to be on offer.
Firstly, the term “guaranteed guidance” is not advice with a capital “A”. What I mean by this is that you will not be given a Financial Conduct Authority (FCA) regulated meeting to discuss your overall financial position. Instead it will be more of a light touch discussion to ensure that you understand the implications of your choices. Hmmm; not really advice at all then!
Secondly, the government says that this guaranteed guidance will be made available through the Money Advice Service and the Pension Advisory Service via the phone, email or online chat, with no direct access as, in their websites words, “they regret that they are unable to accept visitors to their offices”.
With such potential for a massive increase in customer traffic through emails and calls, I can’t help questioning whether they will be able to cope with the demand and exactly what level of service they will be working to. Of course, they could at this very minute be dotting the ‘I’s’ and crossing the ‘T’s’ on an extensive recruitment and training programme that ensures soon to be retirees’ enquiries are handled in a prompt and professional manner; on the other hand they might not!
Normally a glass half full kind of guy, I do try to look for the positive in most things, however my concerns regarding what I perceive to be the largest point of potential disaster with this scheme lies with the people this “guidance” is on offer to; the same people who previously did not seek any advice, often making the very costly mistake of purchasing the first annuity on offer through their employers pension scheme.
What’s changed? Will these same people now all of a sudden feel comfortable in taking advantage of this free guidance from a faceless organisation? Call me cynical but I’m not confident they will.
The main reasons people didn’t seek advice in the past was because they either didn’t understand or realise that choices were available to them, or they were just too embarrassed or anxious about seeking advice, for fear they would be out of their depth; lost in a world of financial gobbledygook.
So what will be different? What has changed to make people all of a sudden question their options to the point where they will be happy to actively seek help and guidance?
Unfortunately unless changes are made, there is a chance that people will just take the money, potentially unaware of the consequences of not making adequate provisions for themselves and their families, both in the short and long term.
The plan I think needs a little fine tuning. Let’s just hope that someone in government HQ is working on a more detailed version!
What do you think?