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Consumer risks around pensions:Written evidence submitted by Citizens Advice to the Work and Pensions Select Committee

7 September 2015

1. Citizens Advice seeks to empower consumers to make the best choices for their own lives, so we support the principles behind the pensions freedoms introduced this year. We are helping more and more people to make informed decisions about their pensions. Last year over 310,000 people sought help from us with their pension, up from 220,000 the previous year.

We therefore have a clear view of the consumer risks around pensions, both through our Citizens Advice service and through delivery of face to face Pension Wise sessions, and we can offer some suggestions to mitigate those risks.

2. Our key messages for the Committee are:

  • To make best use of the freedoms, and to reduce the risks to individuals, consumers need to understand pension savings, need to understand pension choices, and most need advice or guidance to make pension choices.
  • Our Pension Wise service is currently working well for consumers, with very high customer satisfaction rates - our exit surveys show 99.3% are either ‘very satisfied’ or ‘satisfied’.
  • There is room for guidance to develop and offer a more personalised, responsive service. Better referrals from guidance to advice services and changes to the advice market itself could widen access to advice for consumers.   

3. We recommend the following changes:

  • More should be done to ensure that people are referred to Pension Wise, which can then act as a gateway to regulated advice if people want extra support.
  • Pension Wise should build on its early success to offer a more personalised service. The core script should be protected, but advisers should be able to offer guidance on wider issues such annual allowances and the new flat rate pension if asked.
  • Guidance should help tackle the root causes of problems. For example, clients with debt or relationship issues should be referred to other support services.
  • The current restrictions around one off use of Pension Wise should be reviewed. Someone visiting Pension Wise aged 50 should be able to have a second session if they then retire at 65, for example.
  • The market for financial advice should be supported by encouraging new entrants and offering better referrals to restricted advice.

About Citizens Advice

4. Citizens Advice is a national charity which delivers advice services from over 3,300 community locations in England and Wales, run by 338 registered local charities. We are helping more and more people with their pensions. Last year (so excluding Pension Wise) 312,420 people sought help with their pensions from Citizens Advice, comprised of 52,761 face to face clients in our local offices and 259,659 people using our website. Face to face clients were up by 39% compared to 2013/14, and online users rose by 44%.

5. This year we started delivering face-to-face Pension Wise guidance on behalf of the government. All of our Pension Wise staff are accredited professionals. As we deliver this service we are monitoring consumer issues like pensions scams. We have noticed that a significant proportion of clients are raising questions about their broader lives in these sessions, such as financial capability, tax credits or debt. In total 27.3% of our Pension Wise clients have booked a separate Citizens Advice session on other issues to help them find a way forward. 

6. We are submitting evidence because we want to help ensure that consumers receive the guidance and advice they need to make good choices about their pension savings.