'Lack of detail' over guarantee

Plans to offer free, impartial retirement guidance will be put at risk unless the Government urgently makes some key decisions, the pensions industry is warning.

George Osborne has been urged to make decisions quickly.
George Osborne has been urged to make decisions quickly.

In a letter sent today to Chancellor George Osborne, the Association of British Insurers (ABI) and the National Association of Pension Funds (NAPF) are pressing the Government "to make some fundamental decisions quickly" to ensure that the guarantee can be delivered in time to meet the April 2015 deadline.

Thousands of people approaching retirement will be given greater freedom over how they use their pension pot from next April, and the offer of face-to-face guidance, which was announced as part of the radical pensions shake-up in the Budget, is intended to help people make vital decisions over what they do with their nest eggs.

The ABI and the NAPF raised fears over an "unnerving lack of detail" about how the guarantee will be delivered.

They warn that the guidance guarantee "will be at significant risk" unless decisions are taken by the Government by July on defining what areas the guidance guarantee will cover and who it will be available to, who will deliver the guidance, who will take the lead in setting it up and establishing its standards and how the funding framework will work.

Otto Thoresen, the ABI's director general, said: "The guidance guarantee is a crucial part of the Government's pension reform, and the industry fully supports the Government's intention to provide free, impartial guidance to savers on their options as from next April.

"But time is not on our side. No one should under-estimate the work that needs to be done to make this a reality, which is why the Government have some urgent decisions to make.

"We stand ready to help shape the guidance guarantee to make sure it fits well with current retirement communications and systems and delivers value for money."

Joanne Segars, chief executive of the NAPF said: "The Budget announcement was nearly three months ago and there remains an unnerving lack of detail from the Government about how the 'guidance guarantee' will be delivered.

"It is clear the success of the Government's reforms will lie in making sure consumers have access to good impartial guidance so they can make the right decisions about their income for retirement.

"Key to this will be a clear structure and plan for delivery."

A Treasury spokeswoman said: "At Budget we announced the most fundamental change in the way that people access their pension in almost a century, ensuring that more than 300,000 people who retire with defined contribution savings will be able to access these savings more flexibly.

"We've since been consulting on how best to offer pensions guidance to consumers.

"The consultation closes today and we will respond before summer recess with further detail on delivering the pension reforms, including the design of the guidance guarantee."