Page last updated at 10:11 GMT, Wednesday, 28 November 2012

Pensions advice debate

Peers held a debate on access to advice for people with small pensions funds on 27 November 2012.

The debate was called by crossbench peer Baroness Greengross, who is chief executive of the International Longevity Centre and president of the Pensions Policy Institute.

Rules due to come into force on 1 January 2013 will mean independent financial advisers can charge between £500 and £1,000 to the people they advise. At present, advisers are paid by the companies whose products they recommend.

Lady Greengross feared the new system would be too expensive for retirees with small pension pots and may prevent them from seeking financial advice.

She asked the minister to consider setting up a forum to enable the industry regulator, Department for Work and Pensions (DWP) and Treasury to discuss how to "better work together and improve customer outcomes".

Government spokeswoman Baroness Beeston said a similar group had existed since 2007 - "the jointly-led DWP, Treasury, Open Market option review group".

Labour peer Lord Lipsey said improvements to financial advice were needed because "75% of people do not know what an annuity is".

Lord McKenzie of Luton, speaking for the opposition, told peers that an estimated half a million people failed to shop around for the best annuity "losing in aggregate about £1bn a year in income".

Wrapping up the debate, Lady Beeston said it was important that professional financial advice was available for people who have decided it is appropriate for them.

But she told the Lords to be "wary about overstating the problem" about access to advice for those with small pensions pots.

She drew attention to a recent FSA survey which she said revealed that 63% of advisers planned to continue to offer advice to those with savings and investments between £20,000 and £75,000.

"And a further 38% of advisers plan to continue offering advice to those with less than £20,000," she added.

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