Talking head: Economic secretary to the Treasury Andrea Leadsom explains the importance of legislation that requires providers and employers to guide people to the best individual pensions advice.
That is why the chancellor committed during the Budget to a guidance guarantee – everyone with a defined contribution pension will have the right to free and impartial guidance on the options available to them, as they approach retirement.
Individuals will be able to access the guidance online, and may also choose to have a conversation with a pensions expert over the telephone or in a face-to-face session.
As announced by the chancellor last month, the face-to-face channel will be provided by the Citizens Advice Bureau; telephone guidance by The Pensions Advisory Service; and the online service will be delivered by the government, hosted on the gov.uk website.
But the pensions industry and trustees (and employers) also have a crucial role to play in making sure people are aware of the guidance service and how to access it, and benefit from the range of retirement options that will be available to them.
That is why the government is legislating to require that pension providers and schemes signpost their customers to the guidance service. Getting this signposting right is essential.
This work, led by the Treasury, is underpinned by behavioural insights research and user testing, drawing on pension providers’ considerable experience and expertise in communicating with their customers.
Getting this signposting right is essential
These ambitious reforms represent a significant change for the pensions and retirement industries, but they also provide major opportunities.
First, the guidance will equip individuals with the information they need in order to go on and seek professional financial advice.
Access to professional advice must not be restricted to those with large pension pots; there is a real need for the financial services industry to develop more affordable models of advice.
Second, removing the requirement to annuitise will enable companies to develop new products to meet consumer needs and preferences.
I look forward to seeing a genuine mass-market offer – both for advice and retirement products – to meet the full range of consumer needs.
This is a real opportunity for a win-win outcome.
Giving people genuine freedom and support on how to get the most out of their pension savings will serve both savers and the industry well.
Andrea Leadsom is the economic secretary to the Treasury
