09 Feb 2018
Work and pensions committee demand answers on default guidance
The work and pensions committee has criticised the government for not being clear on how it intends to safeguard citizens at the point of retirement.
Frank Field, who is the chair of the works and pensions committee, wrote to the pensions minister, Guy Opperman, and economic secretary to the Treasury, John Glen, demanding further scrutiny of the merits of automatic guidance or advice before people can access their pension pots.
This letter comes after the government removed an amendment to the financial guidance and claims bill, which looked to introduce a form of default guidance for people wishing to access their pensions pots, where they would need to opt out of advice, akin to auto-enrolment.
The amendment was replaced with a rule requiring providers to ask clients whether they have taken guidance, but not enforce a formal opt-out requirement.
Mr Field wrote in his letter: “Existing rules already require schemes to ‘signpost’ to the public guidance service and to recommend to their clients that they seek appropriate guidance or advice. It is not clear how the government’s amendments take us further forward towards the taking of guidance or advice becoming the default course of action.”
He added: “As the Bill continues its progress in the House, I would invite you to give further consideration to how access to a pension pot might, subject to reasonable exceptions, be made contingent on taking a guidance or advice appointment unless the member explicitly opts out.”
Industry views on the issue have been mixed. Stephen Lowe, director of retirement specialist Just, has backed the tighter proposal, saying it would “equip people to make better informed decisions and help to prevent people from being scammed”.
Others like AJ Bell predicted complaints would “go through the roof” if mandatory guidance was put in place in its previously proposed form.