Pensions minister claims it is “old-fashioned” to want face-to-face retirement advice

Lib Dem pensions minister Steve Webb has claimed most people won’t need the free face-to-face retirement advice promised by George Osborne.

Just weeks before the Government’s flagship pension reforms go live, Mr Webb said most people will want to make one of the biggest financial decision of their lives on their own, “sitting on the sofa with a mug of tea”.

The minister also admitted his department is “guessing” how many will take up the option to draw down their pension cash rather than buying an annuity to provide a stable income.

From April 6, people aged over 55 will be able to spend their pension pot as they wish instead of being forced to buy an annuity, many of which have offered poor value for money.

Announcing the radical overhaul of the pensions system in his Budget last year, Chancellor George Osborne promised “free, impartial face-to-face advice” for anyone who wanted it.

But with still no announcement on how many advisors will be available in Scotland or where they’ll be based, Mr Webb is pleading for people not to take up the new options available to them immediately amid fears the system will not be ready.

Speaking to The Sunday Post, he said: “There’s no rush. Unless you absolutely need the cash on April 6 it makes sense to wait, take a big deep breath and come back in a few months.”

Mr Webb now claims most people will get advice online and dismissed the idea it’s a good idea when planning your financial future to talk to another human in the same room.

He said: “I think it’s a slightly old fashioned notion that the only way to get sensible advice on financial services is to sit and have a conversation with somebody.”

Instead, he claims that since many over-55s are at home on the internet, they will plan their entire security in old age online “sitting on the sofa”.

He added: “The website has got everything. It sets out the process and you can follow links. So what we’re saying is that for most, the website is the thing. We will have substantial phone capacity as people sometimes want to speak to a human and there will be face-to-face capacity. It won’t be huge as we think that will be a small part of the overall picture.”

The entire north-east of England is set to have just nine advisors from the new Pensions Wise service. Advisors are currently being recruited in Scotland even though they’ll need to be in post in just five weeks. Asked roughly how many will be based in Scotland, Mr Webb said: “I don’t know off the top of my head”.

His office later said that, despite being pensions minister, that was a question for Citizens Advice Scotland, who have the contract to run Pensions Wise in Scotland. They are expected to make an announcement this week, a month before the reforms launch. The Government-backed service doesn’t even have a phone number yet.

The minister added: “Our message to consumers is there’s a place you can go that is free and independent it’s called Pensions Wise. From April 6, slightly before, you’ll be able to call. You can already go to the website.

“Pensions Wise starts when the new freedoms come in. If you want to phone somebody today, the Pensions Advisory Service is available. There isn’t a Pensions Wise phone number, but there is a Pensions Advisory Service phone number and they are just as good.”

Government have been reckless, by Tom McPhail, Head of pensions research, Hargreaves Lansdowne

This is one of the most significant financial planning decisions anyone makes in their lives. For most people the complexity of it cannot be adequately resolved in one 45-minute meeting with a Pensions Wise advisor, let alone on a website. We give people three months of training before they are allowed to talk to clients, that’s not even giving regulated advice, just giving sensible answers to questions. If they haven’t even recruited the Pensions Wise advisors in Scotland they are going to have to give them some pretty intense training before April 6. This reform is high risk for Government, for pensioners and for the industry. The Government has been reckless in creating those risks which they’ve done to serve their political agenda.

There was more muddle from the minister over how many pensioners will be looking to access their cash and make use of the Pensions Wise service. He said: “Clearly we’re all guessing. Nobody knows for certain. One survey said 5% will take it up, one survey said 93% will take it up. Clearly there’s a bit of uncertainty.”

And Mr Webb, who previously said he was “relaxed” about the potential for pensioners to blow their savings on a Lamborghini and rely on the state to look after them, admitted some people will lose out under the new reforms.

He added: “We’re trying to equip people so they can make as good a choice as they can, but when you set people free some won’t do as well as others.”

Critics have also raised concerns that the changes will open the floodgates to crooks keen to trick people into emptying their pension pots or spend some of it on dodgy investments. And the way the scammers will hook people is through an uptick in the volume of nuisance calls and spam texts.

The Government recognise the potential for problems and so have made it a specific offence for others to pretend to be the official Pensions Wise service by setting up copycat websites or adopting similar sounding names.

And pensions providers must ask anyone looking to withdraw funds whether they’ve been in contact with Pensions Wise first.

But that won’t provide much comfort for the people most of whom will have no interest in taking up the freedoms who’ll be bothered by more time-wasting cold calls and text messages.

Webb said: “It’s not a pensions issue specifically. It’s a crooks issue. There’s a lot of money about to become available and there’s a lot of people going to try and get their hands on it. We want everyone to know the legitimate place to go for this guidance.”