People looking to access retirement savings using pension freedom should be given access to a free financial advice session funded through a voucher system, Steve Webb has said.
Royal London’s head of policy, and former pensions minister, said the system should be a joint initiative between the government and providers to ensure people receive proper regulated financial advice before making important decisions.
Speaking at the work and pensions committee this morning, he said advice was “valuable” and generally well received by clients. “But we have to get people through the door,” he added. “I would like to see advice vouchers.”
Webb explained workers would be handed an advice voucher, have their first consultation for free and then decide if they want to take the relationship any further. “I think it should be a government and industry initiative together,” he said.
Earlier this year, the Personal Finance Society suggested advisers be part of a government voucher system giving “qualified guidance”. Advisers also backed the idea back in 2014 when pension freedom and the guidance guarantee were first announced.
The early bird …
Webb also said wake-up packs and initial guidance on retirement options should come far earlier than they do at present.
He said Royal London and all providers were legally obliged to point people towards Pension Wise but had experienced situations where clients thought they were trying to prevent them accessing their cash.
“All of this points to guidance needing to be much, much earlier,” he said. “Wake-up packs at six months need to be sent much earlier.”
However, Webb added while pension passports and simplified statements were a good idea, the best communication in the world was useless unless people opened the envelope.
“This is where the dashboard comes in,” he said. Webb urged the government to force providers to hand over accurate data for the project. “Without it, the dashboard is a jigsaw with missing pieces,” he warned.