Providers should be allowed ‘greater role’ in supporting members through retirement journey

Industry experts have called for the boundary between advice and guidance to be better defined to allow pension providers to provide greater support to members in their retirement journey.

Speaking at the Work and Pensions Committee’s (WPC) first oral evidence session in its inquiry on accessing pension savings, the panel discussed the advice/guidance boundary, PensionWise usage and efficiency, pensions dashboards, and the general direction of travel for supporting savers.

Association of British Insurers director of policy, long-term savings and protection, Yvonne Braun, stated that providers “should and can” play a greater role, not just in the provision of information at the point of retirement, but “all the way through” the retirement journey.

“That in many ways is the unresolved piece of the puzzle,” she continued. “It is very important that we get this sorted because at the moment the great majority of people retire with DB entitlements, so if something goes wrong with DC pension that is not so critical for their financial security in retirement.

“We all know things are changing, so we need to bring about a step change in how much guidance is taken up and is available.”

The Investing and Saving Alliance head of retirement, Renny Biggins, agreed, adding: “Providers have a much greater role to play here.

“Speaking to our member firms, they really want to go further than they currently do and help their members. The problem they have is there is no clear boundary on the definition between advice and guidance.

“They really want to do more but because they are so concerned about straying into the advice territory, they end up being ultra cautious and doing less for the individual than perhaps they could do. I would like to see that clear definition and perhaps enabling providers to provide an element of personal recommendations or some kind of personalised guidance, because that kind of personalisation can resonate with savers.

“There is not really enough guidance and support out there to help people understand what options are available and when is a good time to make those decisions.”

Financial Services Consumer Panel member, Dr Julia Mundy, concurred, noting that firms were “worried” about stepping over the line between guidance and advice, meaning they were staying away from the line that would push them “much closer” to what consumers need.

“The consumer panel thinks there is scope for this gap to close, but firms will need support,” she added.

Pensions and Lifetime Savings Association deputy director, policy, Joe Dabrowski, said that although there was an “important role” for MoneyHelper to play in supporting people, it was not a “silver bullet” for solving all forms of engagement.

He continued: “It’s really important that schemes can do their piece too, which is part of the reason why we think there are some questions about the advice/guidance boundary and how that can be dealt with better. Schemes should have a duty to support members as they enter decumulation, and understand the choices and paths in front of them.”

During the session, industry experts also suggested that PensionWise could be expanded to better support savers, and said that although the Financial Conduct Authority’s Investment Pathways were not a replacement to advice, they were “a step in the right direction.

Dashboards were also discussed, with most feeling optimistic about its impact on pension savers and the Pensions Dashboards Programme’s timeline for launch.

The accessing pension savings investigation is the second part of the WPC’s three-part inquiry ‘Protecting pension savers - five years on from the pension freedoms’.

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