LV= is urging the government to focus particularly on helping the most vulnerable people access advice at the point of retirement in the upcoming Budget.
The outcome of the Financial Advice Market Review is announced in the Budget on 16 March.
Research from LV= has found that only 34) of people aged over 55 plan to use Pension Wise when they retire and only 22% say they’ll take independent financial advice.
This means that 480,000 people will retire each year without taking regulated advice and could miss out.
LV= believes the low take up of advice is leading to a “mis-buying” crisis where people are making important financial decisions without adequate support. Drastic government intervention is needed to encourage more people to use advice and ensure everyone is able to access it, not just those who happen to be able to afford it, the insurer claims.
LV= wants to see government incentivising the take up of advice by:
- Providing consumers with a voucher to pay towards advice at the point of retirement as 63% people would be more likely to use an adviser if they received a voucher, increasing to 74% of those with a stakeholder pension;
- Introducing a standard definition for regulated advice, as well as ‘information’ and ‘government-backed guidance’, so there are no confusions about the different types of advice and people understand exactly what they’re getting and the protections they have; and
- Offering free advice for the most vulnerable with the smallest pots, and making it mandatory to use Pension Wise for those who don’t take advice, so no one is in a position where they are without support. To enable government to offer free advice, LV= has offered to work with government to offer pensions advice for free, using its own ‘Retirement Wizard’.
Richard Rowney, managing director of life and pensions at LV=, said: “Too few people get the advice they need at the point of retirement and many don’t shop around, meaning they could be missing out. We need bold action from government to create a system where all consumers – no matter how much money they have saved – are able to access affordable, regulated advice to help them make the most of their money.
“By improving the take up of advice, pensions will work harder at retirement, leaving individuals better off and less likely to rely on state support.”