Clarity on advice requirements has been called for following the much-needed expansion of the UK Government’s pension scheme.
Citizens Advice this week welcomed the expansion of the Government’s Pension Wise scheme, but warned providers that greater clarity around advice requirements is needed for consumers looking to access their pension.
Responding to government plans to address excessive pension exit fees and transfer delays, the national charity said expanding Pension Wise would help people better understand the time it takes to move their pension and what costs this can entail.
Gillian Guy, Chief Executive of Citizens Advice, said: “Pension transfer delays and exit charges risk putting consumers off making the right pension decision for them.
“The expansion of Pension Wise to address pension transfer times will help consumers get a better understanding of the time it takes to move their pension, and it’s good to see the Government is taking action to protect people from excessive fees and delays.
“The requirement to take financial advice for people who have a certain size or type of pensions offers an important safeguard to protect consumers. But as it stands many people report that they don’t get enough warning or explanation about why they are required to take financial advice. This can have a knock on effect on the time and money it takes for them to access their pensions.
“Providers need to take this opportunity to ensure consumers get a clear and consistent message about when and why they are required to take financial advice about accessing their pensions.”
Most pension policies with large exit fees date from the 1980s and 90s. Ben Gaukrodger, Manager for Savings Policy at the Association of British Insurers said: “No pensions currently sold by ABI members have early exit fees, and the majority of these products were put in place decades before the Freedom & Choice reforms were introduced. We will engage closely with the FCA and Treasury on this issue going forward.
“Providers want to ensure that customers make informed decisions for their retirement. The industry recognises the value of advice, and continues to support the valuable role that Pension Wise plays.”