Limits of ‘guidance guarantee’ need to be clearer, says The Money Charity

There’s an urgent need for greater clarity over the free, independent advice upon retirement, we say today.

The Financial Conduct Authority (FCA) has set out high-level standards for organisations delivering the free, impartial guidance on retirement. But it’s not clear how far this guidance will be able to go, and how useful it will actually be.

In our response to the consultation on the ’guidance guarantee’ and pension reform, we argue that unless the limits are clearly set and help consumers as much as possible, there is a serious risk that people will make poor choices at this hugely important point in their lives.

If the limits aren’t clearly set, delivery partners will have to ‘play it safe’ and offer only basic support. And if consumers are to be helped to make decisions in a freer, more complicated retirement marketplace, the guidance needs to help people retiring make a decision about what to do with their pension – not just give them lots of information.

Reforms due to take effect from April 2015 mean people with Defined Contribution pension pots will have far greater freedom over how to use that money. Previously, most people with Defined Contribution pensions had to buy an annuity, but after next year they will be able to choose from a far wider range of options.

You can read our full response here.