Pension providers not trusted to give impartial guidance

Which? finds people don’t trust pension providers to offer impartial guidance, underlining the need for the Government’s guarantee of one-to-one guidance to be genuinely impartial, and not delivered by the industry.

A new Which? survey finds 65% of people don’t trust pension providers to offer impartial guidance on their retirement options, which increases to three-quarters (76%) of those aged 55-64.  Consumers are most likely to trust guidance delivered by an independent body such as The Pensions Advisory Service (63%).

The findings come as the Government today closes its consultation on the new pension reforms announced in the Budget. Which? welcomes the plans to give everyone free and impartial guidance on their financial choices at the point of retirement, as a separate survey of Which? members finds that the guidance will be key to making the reforms work.

People welcome that the Government’s reforms offer greater flexibility and choice, with seven in ten (72%) members saying people should be able to do what they like with their pension savings and six in ten (61%) saying that removing the need to buy an annuity is generally a good thing.

However, many aren’t confident about what to do with their pension savings. Nearly half (45%) are worried they will run out of money by leaving their pension invested and taking money out each year, and a third (32%) aren’t confident about how much they should take out each year to avoid this.

Of those we surveyed who aren’t yet retired, three-quarters (76%) said they will need advice about what to do with their pension when they retire, and a quarter (26%) said they don’t know where to get this advice.

This makes it crucial that any guidance given to people approaching retirement is not offered by pension providers and is high quality, personalised and one-to-one. It should take into account all of someone’s savings, investments and pensions, give people clear information on all their options across the market and direct them to other sources of advice, for example regulated advice or debt advice, if necessary.

Which? executive director, Richard Lloyd, said:

“The Government’s pension reforms could help people boost their retirement income by thousands of pounds. But with many unsure about how to get the most from their pension, and not trusting guidance from providers, it’s crucial that everyone involved – the Government, advice agencies, the industry and the regulator – put in place a consumer-friendly system that supports people to make the right decisions.”  

Notes to editors:

  1. Methodology for general public survey: Populus, on behalf of Which?, interviewed a representative sample of 2039 GB adults online between 6th and 8th June 2014. Data were weighted to be demographically representative of all GB adults. Populus is a member of the British Polling Council and abides by its rules. 
  2. Methodology for Which? members survey: Which? surveyed 1,058 Which? Connect Panel members in May 2014, of which 587 were retired and 468 were not yet retired. From the 1058, 403 were aged 65 or above, 288 were aged 55-64 and 229 aged 45-54. 
  3. Which? is calling for:

–      Guaranteed one-to-one guidance to help consumers understand their options and take the best course of action. It should be: 

  • Genuinely impartial – given independently, not by insurers or pension providers, and completely separate from all sales processes.
  • Personalised and accessible to all – via telephone, online or face to face, complemented by free information available online.
  • Comprehensive – people need to be given all options and have them explained clearly.
  • High quality – provided by appropriately qualified staff.
  • The first step – the guidance service must signpost people to further regulated advice​ or intermediary services. 

–      People to be given clear information about their pensions, investments and savings:

  • People should be able to see all their pension savings in one place.
  • The guidance should take into account all of an individual’s sources of retirement income, such as other savings, investments, earnings or rental income from a property. 

–      Alternative retirement income products to be suitable, offer value-for-money and be subject to strong governance.

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