In the Chancellor’s recent Budget announcement it was confirmed that the free and impartial Money Advice Service set up by the Government is to be abolished and replaced with a “slimmed down” version.
The Pensions Advisory Service (TPAS) and Pension Wise will be restructured and the two new bodies will provide separate consumer advice on pensions and money. The reason for this decision appears to be that the MAS has been criticised in recent reports which found that few members of the public had heard of the MAS; that it wasn’t always delivering value for money and that senior staff were allegedly receiving excessive pay.
The new service will aim to provide “frontline” services for people with financial difficulties, and aim to fill the gaps in guidance currently being offered, but it will not have a consumer facing website as the MAS currently does. It was said that the MAS was effectively duplicating other services like Citizens Advice Bureau and Money Saving Expert. This will be a positive step inde-cluttering the amount of information available to individuals. With the amount of information we now have access to, it’s so important that individuals are able to get accurate, useful and free guidance from a trusted source because those who can’t afford advice need somewhere to turn.
Personal finance is a complex enough subject without adding in changes to legislation, the variety of products that are available and the advice on offer. Your employees need to understand how to manage their finances at the fundamental level and what they want to achieve with their money before they can even think about speaking to an adviser. They could spend months searching for this kind of information, and while the Money Advice Service may have been useful to some people, the guidance given isn’t relevant to every individual’s circumstances. What people really need is practical financial education to help them make sense of their own finances to help them decide if they need advice.
Some employees may be able to afford professional advice, but then there’s the question of where to get it from. Employers can’t legally give advice to their employees, but they can engage with an external supplier to provide this support for their employees. You will also be able to receive increased Tax and National Insurance relief on advice for employees from April 2017. In addition to this, in the future employees may be able to withdraw money from their defined contribution pension savings to pay for advice. Your employees are going to need guidance to help them navigate through minefield of personal finance, and no one is better placed than you to help them get it.
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