Revealed: Pension Wise official name for Guidance Guarantee

In its attempt to minimise the chances of people spending their whole pension or being slapped by high tax charges for removing enough to push them into a higher bracket, the government pledged a free guidance service when announcing the pension freedoms. This has largely been referred to as the Guidance Guarantee, but has now been given an official name: Pension Wise, carrying the slogan "Your money. Your choice." Update: Citizens Advice has revealed the 44 locations where it will be providing face-to-face guidance.

According to the government, more than 300,000 savers with defined contribution funds will be eligible for the guidance each year, from the age of 55. The big question is how many people will actually choose to take the guidance, and not just make a plan without it.

Free guidance was only introduced last year, and so is unknown to many. The government's task is therefore to decide on the best way to inform the public of the service, and the most likely options seem to be a large advertising campaign or by including details in the wake-up packs people receive as they approach retirement.

Another risk that the government needs to mitigate is people believing guidance and regulated advice are comparable, and using the guidance to make their full retirement plan. Guidance and advice are not the same; whereas regulated advice looks at the individual's circumstances and provides tailored advice based on a range of factors, guidance is generic and merely explains the range of options available. For example, guidance may explain that enhanced annuities are a retirement option, but advice would explain whether or not the individual qualifies for one.

With such a large difference between the two, guidance is not a substitute for advice, and should be the first step to making a decision rather than being used to make a final plan. The pension freedoms will introduce a new era for pensions, but without the right information or confidence in the system, many people may make decisions out of naivety or fear, which is unlikely to lead to the best choices.

How do you think Pension Wise should be marketed, and will you use it? Let us know with a comment below.

Call 0800 304 7288 for a friendly chat about your pension

The details provided in this article are for general information only and are in no way deemed to be financial advice. All of the material is correct as of the publication date, but could be out-of-date by the time you read the article. For our latest information and news, please see our articles section: https://www.portafina.co.uk/whats-new

We are really looking forward to reading your comments. Before you start writing, please just remember that everything you write will be displayed publically – including your name. Not sure what sort of thing you can write, and what sort of things you should avoid? Please have a quick read of our social rules for guidance.

Back to top