Following the announcement last March that the government was to close the Money Advice Service, speculation has been rife on what would replace it. (1) Well the answer is an all new financial guidance service that will cover not only debt and other money issues, but also offer pension advice.
This new, as yet unnamed, body will replace the under-fire Money Advice Service (MAS) as well as two pension advice services; Pensions Advisory Service, and Pension Wise. After seeing MAS criticised for wasting resources the government believes that a combined advisory body will be more efficient. (2)
The MAS was set up in 2010 to point people with serious debt issues in the right direction to find help. At the time it was estimated that 19 million people would benefit from its help (3). It was also designed to help consumers understand financial services thus improving their decision making. Criticisms of their work lead to inquiries by the Commons Treasury Select Committee and National Audit Office who raised questions about the value for money and effectiveness of its education role (2).
The two pension bodies replaced include Pension Wise which was established alongside the pension freedoms of 2015. The aim of Pension Wise is to increase understanding of the available options for those approaching retirement. Also being replaced is The Pensions Advisory Service which is an independent non-profit company established to provides free information, advice and guidance on all types of pensions. Additionally they can help the public who has a complaint concerning their pension arrangement. The organisation is grant-aided by the Department for Work and Pensions.
The new organisation will again be paid for by a levy on financial services companies. (1) Industry and consumer finance groups have given the proposal a mixed response due to concerns over how the two distinct strands of the new body would work together effectively. (3) However, with operational details still sketchy and no timetable for its launch time will tell if lessons from MAS have been learnt.
When announcing the plans, pensions minister Richard Harrington said: “A single guidance body will be more efficient and will help consumers make the right financial decisions. We are committed to ensuring people can access the best free and impartial financial guidance possible.” (2)
The value of pensions and investments and the income they produce can fall as well as rise. You may get back less than you invested.