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Pension Wise more expensive than independent advice

Government commits to publishing monthly statistics on interaction levels with the service to boost transparency

21 December 2015

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The cost of the government's Pension Wise guidance service per transaction for October 2015 was £496 - almost £350 more than the average hourly rate of an independent financial adviser.

The figure represents a poor return on the £39.4m the service will cost for the 2015/16 year, lending weight to Steve Webb's complaint, the former pension minister, that the money spent on Pension Wise should have been used to give people vouchers that could be spent on independent financial advice instead.

Pension Wise is delivered by the Pensions Advisory Service and the Citizens Advice Bureau, who offer phone, online and face-to-face guidance to over 55-year-olds on the options available to them regarding the use of their pension savings.

According to figures released by Unbiased, the average hourly fee charged by financial advisers in 2015 was £150, which was the same in 2014, and represents a £25 decrease from the 2013 figure of £175.

In its response to the department of Work and Pensions report into pension freedom and advice, the government has now committed to publishing monthly statistics into how people are interacting with Pension Wise in all of its delivery platforms.

The £496 cost per transaction represents a paltry 0.8 per cent decrease from September 2015, but the government is likely to take greater satisfaction in the 15 per cent increase in completed transactions.

However in order for Pension Wise to match the hourly rate charged by independent advisers, the number of transactions completed would need to increase from its current 40,600, to over 125,000.

 

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Pensions