Over 90% of IFAs believe pensions, including personal accounts, cannot be distributed in the workplace safely if generic advice is the only available option.
A straw poll carried out on the Beehive website by Steve Bee, head of pensions strategy at Scottish Life, asked advisers - “Do you think pensions can be safely distributed in the workplace with generic advice only?”
The results of the poll show 8.9% of respondents believe personal accounts can be distributed just with generic advice, although 91.1% of advisers believe workers will need more than the government’s proposed system of ‘tailored, generic information’.
One adviser which responded to the poll added: “Unless people can be sure that some pension provision will make them better-off than none at all, then personal accounts should not be introduced. Personal accounts cannot work without first reforming the State pension system.”
According to Bee, in his latest blog entry on the site, a number of respondents also raised concerns about the effect means-testing will have on people’s income in retirement, with one person stating: “The means-testing is the main problem; will sufficient information be given to allow individuals to make a correct judgement as to the affect their savings will have on means tested benefits?”
In addition, respondents to the poll suggested as the “target group are primarily the lowest paid in the workforce...surely this group is more in need of specific advice than those who are better paid and who would generally be considered to be more financially astute?"
One adviser points out “most of the clients I meet have little or no idea what the information contained in their employer documentation really means. Although some attempt to make some understanding, it is often misguided”.
Since the second pensions white paper, which outlined proposals for personal accounts, the government has appointed Otto Thoresen, chef executive of Aegon UK to lead a review to develop a national system of ‘tailored, generic advice’ which will be designed to help people make appropriate choices in relation to the new savings system.
However, one individual argues: “The vast majority of people in the UK have a very limited understanding of financial matters, and pension provision may not be the most appropriate use of some peoples’ limited resources. Generic advice cannot begin to tackle this lack of understanding.”
Following these comments Bee suggests it “seems a shame to me that the experience of so many professional IFAs who work at the coalface of pensions day in and day out is not being utilised properly by the Government as they seek to overhaul our antiquated and inefficient pension system”.
He adds: “The accumulated knowledge of the IFAs who took the time to vote in this poll alone would, I should have thought, be so helpful to anyone wishing to understand the realities of distributing pensions safely in a complex environment.”
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 7034 2681 or email [email protected]IFAonline
Square Mile’s series of informal interviews
Latest news and analysis
69% of general population
Fidelity International global economist's outlook