Concern that free pensions guidance service being underused

Pension experts have warned that a free guidance service for savers is being underused ahead of sweeping reforms that will give people more freedom to access their money.

Providers are preparing for a sharp rise in requests to cash in pensions after the reforms come into force on Monday, but bookings for the government-run "Pension Wise" guidance service, which opened nearly two weeks ago, were not at capacity.

"Call volumes have not been heavy this week," said Michelle Cracknell, chief executive of The Pension Advisory Service, which offers the 45-minute sessions.

The much-anticipated reforms will end the need to buy an annuity - an insurance product that gives a guaranteed income - and the government estimates that 500,000 savers could make that leap from April 6.

Pension experts blamed a decision by the Treasury to launch the Pension Wise booking line the week before the pre-election "purdah" period that restricts promotion campaigns.

Since purdah began on Monday, a television campaign for Pension Wise has been halted.

"The service should have been set up much earlier and properly promoted," said Malcolm McLean of consultancy Barnett Waddingham, who is a former chief executive of TPAS.

"People are looking for information and it is a pity that they are not turning to Pension Wise, an impartial source."

Ros Altmann, a pensions expert and the government's older workers business champion, said: "We really do need a campaign to promote the booking line for Pension Wise."

The development comes as pension providers report a significant rise in interest from customers about the new cashing in option.

Scottish Widows, which is part of the taxpayer-backed Lloyds Banking Group, had 120,000 visitors to its retirement website in the past fortnight alone. In comparison, it had about 200,000 visits to the same website from October to February.

"There is still a lack of understanding and certainty about what the changes mean and how they may affect consumers' individual circumstances," the company said.

The Treasury said that during purdah, factual print and digital advertising would remain in place to direct people towards the Pension Wise service. Currently, it does not have a promotional campaign for the guidance booking line.

It added "To ensure individuals receive guidance on the new freedoms the government has placed a statutory duty on the Financial Conduct Authority to require pension providers to signpost individuals to Pension Wise,"

"The Department for Work and Pensions has introduced a similar requirement on trust-based pension schemes."

The Treasury said there was capacity to provide more than 10,000 guidance appointments in April, with Citizens Advice beginning face-to-face sessions from April 7.

The reforms were announced in the 2014 Budget.

Standard Life, one of the country's leading pension providers, has estimated that 500,000 customers will be eligible to take advantage of them and it expects instructions from its customers to be up 85 per cent this year compared with 2014.

Aegon, another provider, has taken on an extra 150 staff and expects many early requests for cash.

"We expect a short term spike in the number of people withdrawing some or all of their money," said Aegon.

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