Few consumers would trust their pension provider to give retirement guidance

11th June 2014

Just one third of Britons would trust retirement advice given by their pension provider according to survey by LV=. The survey comes as the Government closes a consultation into what form ‘retirement guidance’, promised in the budget to coincide with the annuity reforms, should take.

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The survey conducted on behalf of LV= found that three times as many consumers over the age of 55 would attend a guidance session offered by an impartial organisation rather than from their own provider.

The research shows that the vast majority (78%) of Britain’s over-55’s are in favour of those approaching retirement having access to free guidance to ensure that they make the most of their pension savings. Some 52% of the over-55s say that they would attend a guidance session provided by an independent, government-backed, consumer body, but only a sixth or 17% would attend a guidance session offered by their existing pension provider when asked to choose between the two.

LV= says the research highlights the fact that consumers are more likely to trust and act on retirement guidance provided by an independent body than that provided by their existing pension provider. Less than a fifth (19%) of over-55s say that they would act on guidance provided to them by their pension provider, whereas close to half (48%) would act on guidance from an independent body.

Richard Rowney, managing director of LV= Life and Pensions said: “Those approaching retirement will have even greater choice as to how they take their pension savings from April 2015 and it is important that they are made aware of all the options available to them. The findings of this research support the widely held view that, for the guidance to be a success, those approaching retirement need to have trust in the process and the organisation offering the service. It is clear from our research that, in order for this to be achieved, the sessions should be provided by an independent body. LV= is committed to improving outcomes for those approaching retirement and in our response to the HMT ‘Freedom and Choice in Pensions’ consultation we have outlined the changes that we believe need to be made to achieve this.”

LV has also put together a six-point charter which outlines what the business is calling for.

Incentives for pensions savings – an assurance that the 25% tax-free commencement lump sum at retirement continues to be available as an incentive to individuals to save in the long-term for a pension;

Simplify the regulations around pensions – remove a number of regulatory restrictions to allow product innovation which support the new choices for consumers and enable new products to meet “in retirement” needs;

The “guidance guarantee” to be delivered independently and not by incumbent providers and offer clear sign-posting to regulated advice where appropriate;

A “regulated advice voucher” funded by industry, to be made available to individuals to ensure best possible outcome for individuals;

A restriction on pension providers engaging with customers until they have confirmed they have had guidance or chosen not to take it; and

A “pensions passport” to ensure each individual receives consistent and clear information from both the State and their pension providers about their pension.

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