IFA's open letter to Webb demands pension advice push

Retirement Angels founder Alan Higham has written an open letter to pensions minister Steve Webb demanding pension reform that pushes people towards advice.

Higham was accidentally sent an email by staff at the Department for Work and Pensions (DWP) revealing opposition to reform that encourages use of financial advisers.

First published on his blog, this letter to Webb (pictured) sets out Higham's proposal for reform of the at-retirement stage and calls on the minister to take action.

Dear Steve

There is a simple solution worth trying to the persistent problem of people wasting billions of pension savings each year at retirement.

Experts I have consulted across insurers, consultants, IFAs, trustees, educational bodies and charities helping older people all think it is a great idea and worth a try.

The solution has two legs.

1. A mandatory one page letter to be sent to the consumer just before retirement.

It gives people the straight facts and will stimulate action and also enable action.

Example:

Dear Retiree

You have £40,000 of retirement savings that you need to decide how to turn into an income. You have one chance to make a good decision as you cannot normally change your mind later on.

The difference between a good decision and a bad decision is typically worth £8,000 (it could be more or less depending on your personal situation).

In the enclosed pack you will find all the information you need to make a decision.

We understand this decision is difficult and complicated. The Regulator recommends you seek independent financial advice should you need any help.

You will find an adviser who specialises in helping people like you on retirement at: [www etc] or by calling [0800 xxxxxx.]

All the advisers have agreed to a Code of Conduct which includes the guarantee that you will not have to pay anything to them unless they can make you better off.

Please take the time to make the right decision for you.

2. An accredited pool of experts, regulated by the FSA, willing to help people make a sensible decision.

There is no compulsion to use this pool of people, just an easy opportunity for those who want to. All the evidence points to people needing expert help and finding it very hard to access it.

To provide additional consumer protection, all advisers will be accredited by the Society of Later Life Advisers (SOLLA).

SOLLA has a fantastic track record in setting standards for advising elderly people.

It is not mandatory to be a SOLLA member but such is the value of the accreditation that local authorities will only refer people seeking advice on care funding to a SOLLA member.

All advisers will have to satisfy minimum training, experience and CPD requirements.

People accessing a SOLLA accredited adviser will benefit from the following code. The code strikes a balance between ensuring good outcomes for members whilst being practical to implement.

It is time for transparency and honest debate on this important area. The press reports that millions of old people will struggle to heat their homes this winter.

There is no reason to delay solving the problem.

I look forward to hearing back from you. The people who support this action would be willing to meet with you to discuss it.

Yours sincerely
Alan Higham