Cost of Pension wise creeps up amid December lull
Transaction cost up 4%
The government's advice service Pension wise is becoming more expensive to provide to consumers, as the number of people using it dips, latest official data has shown.
The cost of handling consumer queries through Pension wise was up 4% in the last month as the number of total sessions fell.
Pension wise completed 3,205 sessions, both telephone-based and face to face in December - 60% fewer than in the month before, when it had handled 5,365 sessions.
At the same time the cost per session crept up from £496 to £516.
Pension wise was set up by the government as part of its April freedom reforms to help people make informed choices with their pensions at the point of retirement.
Delivered by Citizens Advice and The Pensions Advisory Service, it is available for consumers over the age of 55 free of charge via online, the telephone and face-to-face channels.
The service's transaction cost is based on the running costs of all delivery partners - including their website, marketing costs and staff costs - and as such fluctuates according to demand, a spokesperson explained.
The cost of the largely-industry funded service in 2015-16 is £39.4m, to which advisers were asked to contribute £4.7m.
Latest data released by the government showed overall, the service has completed 43,900 transactions and had 2.03 million visits to its website since launch in February.
Telephone-based consultations at Pension wise declined steadily since freedom and choise was launched, from 2,340 last April to 745 in December. Face to face sessions increased from 1,677 to 2,460 in December. However, they too slumped from their spike of 5,343 sessions in October.
A Treasury spokesperson said: "Pension wse is a unique service that delivers free and impartial guidance and, with over 43,000 appointments and over 2 million visits to the website, it is clear that it has been a success.
"As you'd expect, the service faced a lower than usual demand in the Christmas period and the seasonal closure of Citizens Advice Bureau meant there were fewer weeks in which to deliver appointments.
"The New Year has already seen an increase in appointments and visitors to the website."
Value for money
Advisers have branded Pension wise poor value for money compared with full financial advice, with many saying they could provide the service cheaper.
Old Mutual Wealth investment platform chief executive officer Steven Levin at the time compared the cost with the average hourly cost of full personalised advice, which he said was around £175.
Hargreaves Lansdown cautioned a slowdown of pension activity in December was to be expected, however it called on policy makers to improve the take-up of the service or instead ensure better guidance from pension providers.
Head of retirement policy Tom McPhail said Pension wise provided an "excellent service" which gave most people who use it "a very positive experience".
He said: "Policymakers need to improve the take-up or to make sure suitable alternative solutions are in place.
"Any pension investor should be able to receive good quality guidance and support from their pension provider because this is where most of them turn to."
The government and Financial Conduct Authority (FCA) are currently looking at how guidance and advice can be structured to ensure better access for consumers, as part of their joint Financial Advice Market Review.
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