Vince Linnane from the PMI announces developments to the Certificate in Pension Scheme Member Guidance and pushes the importance of tailored advice.

Just two years have passed since George Osborne's Budget-Day bombshell that was the Freedom and Choice agenda.

Contained within the consultation document was the suggestion of a 'Guidance Guarantee.' This ultimately led to the development of what is now the Pension Wise service.

The remit of Pension Wise has always been constrained to work within strictly-defined parameters.

Firstly, and most importantly, it provides generic information rather than individually-tailored advice.

Secondly, it is only available to the over 50's.

Thirdly, and potentially likely to cause the most problems, Pension Wise is only available to those who have accrued benefits within defined contribution (DC) pension arrangements.

Why is this problematic? This is mainly because many members of schemes attracted to the Freedom and Choice initiatives have defined benefit (DB) pension savings which are currently not included in Pension Wise guidance.

The general public may not understand the technical issues of scheme design which may disqualify them from the free guidance service.

Such people might feel reluctant to pay an independent financial adviser (IFA) for professional advice and without good scheme communications may never appreciate the true value that a DB pension offers.

Scammers are quick to spot new opportunities and so may be able to attract such members with the lure of converting their DB pension to a cherished lump sum with few questions asked.

The Financial Conduct Authority (FCA) has recognised there is a gap between guidance and tailored advice and, amongst others, the Pensions Regulator has input to their recent consultation on this matter.

For most pension scheme members the obvious place to go to get tailored guidance is their scheme's trustee or administrator.

However, for the information they receive to be really useful, a regulatory structure which includes safe harbour (within defined parameters) against future litigation is essential.

Appropriately qualified administrators could then provide tailored guidance which must surely be in the best interests of both the members and the scheme.

To this end, we at the PMI have been working on the development of the Certificate in Pension Scheme Member Guidance which will provide administrators and others with the technical knowledge and the customer service skills necessary to engage with members about their benefits.

Written by Vince Linnane, Chief Executive, PMI.