Good advice
Pensions is a complicated business. That may sound obvious, but this complexity can have a serious effect people’s decision-making for the future. Studies have shown that, when it comes to taking those vital retirement choices, many people simply switch off and do nothing. We estimate that seven million people are undersaving for their retirement. This is one reason why we want to automatically enrol people into personal accounts. But that’s not enough. It’s clear that people will need access to clear information and guidance to help them make the choices available to them – such as whether to opt-out and whether to save more than the minimum
I gave a speech about this at the Resolution Foundation Conference last week. Having spoken to carers, young people and parents and read the comments on my blog I’m fully aware that people need help understanding a wide range of financial issues – not just pensions. For people to answer questions like “can I afford to pay into personal accounts when I’ve got debts to pay off?”, “how will a career break affect my savings?” they’re going to need general financial advice that is sufficiently personal to help the individual. So having accepted this principle we’ve now got to work out how we get such advice out there. There are already some good existing examples out there. The Pensions Advisory Service shows it’s possible to provide low cost, accessible advice that reaches all parts of the community.
I’m sure this is one of the examples that Otto Thoresen – who has been asked by the Treasury to investigate how a national generic financial advice can be delivered – will look at as he carries out his work. Otto has issued his call for evidence and I hope that a wide range of people will feed in their views.
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This entry was posted on Monday, March 19th, 2007 at 12:51 PM by James Purnell and categorized in General posts.