The government will be reviewing proposals that have been put forward by the work and pensions select committee that would see people get mandatory guidance at retirement. However, speaking at the Financial Guidance and Claims Bill's first reading last week, pensions minister Guy Opperman would not commit to the measure. Saying that he supported the need for default guidance, he said that he believed the existing setup was sufficient to encourage people to seek guidance.
"We support the need for default guidance for people wishing to take advantage of pensions freedoms. That is why the new body is specifically required to meet the government's guarantee to make free and impartial guidance available to those considering accessing their pension pots."
"The existing signposting regime already provides individuals with important information and encouragement to take advantage of guidance and advice before accessing a pension pot."
&qupt;However, the government accept that there is merit in providing for people to receive a further nudge and that this is the right direction of travel. To this end, my officials are reviewing the proposals put forward by the Select Committee, and we will respond to the House and to the Bill Committee in due course."
The former pensions minister, Baroness Ros Altmann has expressed her disappointment that people will not automatically receive guidance.
"I am really disappointed the government seems to have bowed to industry pressure and proposes to weaken consumer protection for pension customers," she said. "By removing a clause introduced in the House of Lords, designed to protect consumers' pensions better, more people are at risk of losing their hard-earned savings in scams, frauds and unwise pension withdrawals."
The industry is split as to whether mandatory guidance is a good thing. Some point to the fact that it will equip people to make better-informed decisions and help prevent them being scammed or landed with an ill-suited pension. However, others in the industry have said that complaints could increase significantly if mandatory guidance was put in place in its proposed form, arguing that many people would not like being prevented from accessing their cash immediately at retirement.