The Resolution Foundation believes the UK can learn lessons about financial awareness and advice by looking at the way New Zealand's Retirement Commission operates.
At a seminar discussing the critical role of advice in supporting pension reform, the Foundation unveiled an evaluation of New Zealand’s retirement commission and ‘Sorted’ website, conducted on its behalf by the Pensions Policy Institute (PPI).
As the government is currently considering the “communications and information package” which will accompany the reforms set out in the white paper, the Foundation suggests if the UK is to follow New Zealand into introducing a version of the ‘Kiwisaver’ it should also look at how they provide information to consumers.
In the 24-page report, the PPI sets out how the Retirement Commission’s education programme works, mainly through it’s website ‘Sorted’, it suggests the main aspects of the New Zealand system are:
- The Commission provides guidance to people to help them make financial decisions but stops short of providing actual advice. This allows it to remain impartial yet “promote the consumer’s responsibility to make well-informed choices”.
- It is an independent Commission, free from both government and industry, and has the additional role of researching and advising the government on the effectiveness of pension policy.
- The main source of education is through the website which concentrates on lifetime financial planning and is not focused just on retirement or specific products. It covers a range of personal financial issues from debt management to saving, with the aim of promoting saving for retirement without using pensions as a starting point.
- The website is user-friendly, with informal language and has a heavily advertised brand which creates trust as a brand independent of the government. It also uses games and calculators to make people interact and more likely to take action on savings.
- The Commission is also developing new ways of reaching people away from the website through “financial champions” and seminars to provide financial education in the workplace.
Following the reforms put forward by the government for pensions reform, the Resolution Foundation and the PPI believe there are important lessons the UK could adapt from the New Zealand experience.
Despite comments from John Hutton, the Work and Pensions Secretary, suggesting the reason the government has not set up a independent review body for pensions is he does not want to set up another “quango”, the PPI and Resolution Foundation argue there is good reasons for having a independent commission.
It says there seems to be more reason for there to be one in the UK than New Zealand as the British pension system is both lower and more difficult to understand, while the introduction of a national auto-enrolment savings scheme make it more necessary to have a body providing generic guidance on personal financial planning.
In addition, the body would have to be independent to ensure consumers trust the guidance is impartial, with a website being the obvious and most cost-effective way of attracting people in, giving them information and starting to engage them in some financial planning.
The report also suggests ideas in New Zealand to move beyond the website through “financial champions” and workplace education, should be watched carefully to see if they are successful and how they could be adapted to the UK system.
However, the report does note there may be an overlap with the way a Retirement Commission and website - as set out in New Zealand - works and the services provided by the Financial Services Authority (FSA) which currently uses it’s website to give financial information.
But whichever route is found most practical, the PPI and Resolution Foundation says while the aim would be to promote retirement savings, the best way to engage people would be to offer financial planning across all issues, with the emphasis taken off the word pensions.
Sue Regan, chief executive of the Resolution Foundation, says at a seminar it held discussing the issue of advice, the consensus around the table - including Alison O’Connell director of the PPI and Malcolm McLean chief executive of the Pensions Advisory Service (TPAS) - was advice has a critical role to play in making pension reform a success.
But she adds the government needs to go further in developing options for providing information and advice which support its objective of giving people more personal responsibility for their pensions.
Regan says: “We believe the government must do more than simply provide information , it must also promote access to impartial, generic advice if it is to meet its reform objectives.”
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Nyree Stewart on 020 7968 4558 or email [email protected]IFAonline
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