Why are we not talking about our pensions? An IFA’s view (guest blog)

personal pensions

On 6 April 2015, brand new rules that affect the way UK retirees can access their pension will come into effect. To assist people in generating their retirement income the government has guaranteed free guidance to all retirees, yet a recent study by Portal Financial showed that 3 in 4 say they will shun this free guidance. 78.4 per cent of women surveyed said that they would not be using the government’s free Pension Wise guidance scheme, with 75.1 per cent of men saying the same.

Another study by Partnership also laid out evidence that people aren’t talking about their pensions, even with the confusion surrounding the new pension rules. With less than two months to go until the new pension reforms, just 31% of 40 to 70 year olds have spoken to anyone about the changes and, for the most part they are not even having these conversations with financial experts; 44% of those asked have only had a casual conversation about the reforms with their partner, while a worryingly low 16% have taken the initiative to speak to an independent financial advisor or their pension provider.

With some of the most radical pension reforms in history coming into effect, and offering such drastic changes to the way we access our pension savings, why are we not speaking with the experts available to us and potentially walking blindly into a financial minefield?

What is Pension Wise?

Pension Wise is a free and impartial government service designed to help you understand your pension options. It was announced by the government earlier this year in order to provide guidance to the 300,000+ individuals each year with defined contribution pension savings as, from April 2015 they will have the option to access their savings as they wish from the age of 55. It is being delivered by Citizens Advice and The Pensions Advisory Service and offers a six step process to understand how to turn your pension pot into a retirement income.

Oliver Foster, IFA at True Potential Wealth Management isn’t fully convinced by the service though:

“I don’t really understand what function this website is supposed to have because really people should be seeking independent advice; I thought that’s what the government wanted people to do, to ensure they’re doing the right thing? People could potentially interpret this guidance in the wrong manner, as most people aren’t professional financial advisors. It’s always going to be in your best interest to seek independent advice if you don’t know what you’re doing yourself.”

Lack of marketing from the government

The recent report showing that 3 in 4 people are expected to shun the guidance is not a good indication, and highlights that the Pension Wise initiative may not be a success, at least in the short term. Initially the government were using the term ‘guidance guarantee’ but now even the term ‘guarantee’ has been dropped with Richard Butcher, managing director at professional trustee provider PTL stating this shows policymakers have lost “what little amount of goodwill they had started to build”. Oliver Foster agrees:

“I don’t think the government have done much promotion for it [Pension Wise]. I‘ve seen nothing on TV or any other adverts for it. If they want people to get logging on for guidance then they need to start marketing it”.

The government’s older workers champion Dr Ros Altmann also called upon the government and the financial industry to increase their marketing in order to promote the benefits of the service to savers. Regarding the recent report, she stated that “these findings also emphasise why it is so important that the Financial Conduct Authority ensures pension companies have a duty of care to ask customers questions and warm them of risks relevant to their pension decisions”. She believes this will help retirees to “avoid making unsuitable choices”.

Foster is cautious however, about the Partnership report that states people aren’t talking about the pension reforms:

“I think that report seems a little ambiguous. 99 per cent of the people who get in touch with me for pension advice do already know about the pension reforms.”

The difference between advice and guidance

The free guidance that the UK government has pledged to offer to those approaching retirement should in no circumstances be confused with financial advice.

Their online tool takes you through a 6 step process to understand all the options available to you. And while it helps to give you a clearer picture of your retirement options, the government has categorically stated that they will not recommend any products or tell you what to do with your money.

This is of limited benefit as the majority of retirees are simply not financial experts; with the risk of running out of money now becoming a very real possibility if your money isn’t managed properly, professional advice from an independent and unbiased financial advisor can help you to enjoy a more secure and stable retirement.

This table outlines the major difference between guidance and advice:

Pension Wise Independent Financial Advice
Clear explanation of the options available

Personally tailored quotes and recommendations


Information about product-specific fees and charges


Qualified advice from an FCA-authorised finance professional


Facility to arrange and manage your pension income plan on your behalf


Regular updates to ensure your retirement income remains on track


Recourse to compensation through the FCA if you’re mis-advised


Long-term support in selecting and managing any investment portfolios


Ryan Smith is part of the content development team at My Retirement Options, guiding retirees through a changing pension market.


The Pension Plowman is happy to promote the views of others without endorsing them personally.

Please do not take any inference in this article that people should not take guidance from Pension Wise

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
This entry was posted in pension playpen, pensions, Pensions Regulator and tagged , , , , , , , . Bookmark the permalink.

Leave a Reply