The Government’s long awaited update on delivering pensions guidance, published last week, included the brand for the new service – “Pension Wise. Your Money Your Choice.” It encouraged people to register for the guidance, but what will they be registering for?
The eagerly anticipated document, unfortunately, provided little detail on several outstanding questions. Answers to these are key to the service working effectively, fitting into a smooth customer journey, and ensuring there is widespread confidence in the service and the value it adds.
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What will happen before a guidance session?
Providers have a critical role in raising customer awareness about guidance, and to do so we have agreed to use a standard signposting document in retirement communications. We don’t know yet what steer customers will be given to prepare for their guidance session. But advance preparation is essential, or the session will be less efficient, starting with a long list of questions that the user might not be able to answer. Providers could have a role in this, setting out the key factors for the customer to think about – but it would need to be done in a consistent way, with a good idea of what a session looks like. -
What will happen at a guidance session?
The FCA has set out the standards a guidance session must meet, and what the guides will need to know about. We don’t know how much detail will be provided on the pros and cons of each option, whether it will it be scripted or free-flowing, targeted at the customer’s needs or ensuring all subjects are covered. Afterwards, customers will be given a record of their session. This is a crucial document – it should be designed so that providers can make use of it in meeting needs the customer has already identified, without replicating the guidance process themselves. -
How will we know it has worked?
The service will be evaluated in the first year – this is good news, but what will it measure? Take-up is important, and we know the service will be marketed, but what will return on investment look like? At an estimated cost of £35m in one year - value for money is important. A good quality service is also important and it needs to leave people better informed about their options. But is that enough? On the fundamental question of what a good retirement outcome looks like, last week’s update only gives the ambiguous statement, “success for the guidance service will be determined by what constitutes success for the consumer”.
Providers continue to work flat out to implement pension flexibility, and are committed to further improving customers’ awareness and understanding of their retirement options, including by helping to make Pension Wise be as effective as it can be. We are keen to understand the whole guidance process in order to contribute fully to the service’s success. But the clock is ticking. The Government needs to do more - and quickly.
Rob Yuille is Manager, Retirement Policy at the Association of British Insurers (ABI)
To find out more, debate and discuss this issue, book your place at the ABI Retirement Conference on 25 February 2015.