We use maps to help us get directions from A to B. The Money and Pensions Service (Maps) however have recently launched a 10-year strategy, ‘To improve the financial well-being in the UK’.
Maps is the reborn and rebranded Money Advice Service (MAS). It combines the services previously provided by MAS, The Pensions Advisory Service (TPAS) and PensionsWise and is also responsible for the delivery of the pensions dashboard. Therefore, it will provide guidance and advice from, as the saying goes, cradle to grave.
I understand that my use of the word ‘advice’ when referring to MAS is rather controversial, especially given the many debates that have been had about the role of MAS and whether it was actually providing advice or not.
I can see these debates continuing due to the wide remit of Maps. One of Maps most important roles is debt counselling, here advice is given by Maps and other charities because it is not regulated investment advice.
If we allow ourselves to be distracted by what is guidance and what is advice, there is however a danger we lose sight of what are the laudable aims of this strategy document. Also, if the strategy is successful it will impact on many aspects of the financial services market.
So, what does it contain? Well, the strategy document sets out the following five objectives
Financial Foundations – Two million more children and young people to receive a meaningful financial education;
Nation of Savers – Two million more working-age ‘struggling’ and ‘squeezed’ people to save regularly;
Credit Counts – Two million fewer people using credit for food and bills;
Better Debt Advice – Two million more people accessing debt advice; and
Future Focus – Five million more people understanding enough to plan for later life.
Firstly, I shall nit-pick. If the UK economy booms then less will get into debt, consumers should have more money in their pockets resulting in more savings therefore the numbers requiring help with debt and credit should reduce anyway. On the other hand, the UK economy may continue to underperform and the opposite will occur. Therefore, are objectives in actual numbers a true reflection of whether Maps will be successful or not?
Later life market
Looking at the objectives with the later life market in mind, it is not just the final target, Future Focus, that impacts on this market. Age is no barrier when it comes to using credit or getting into debt. How many retired people are using credit for food and bills? Many find it difficult to adjust their spending in retirement to their new (often lower) income which leads them to the later life lending market. Some enter retirement with large debts.
A way to reduce these numbers is through the guidance that is provided before retirement. Maps is responsible for overseeing the delivery of a pensions dashboard.
If someone reaches retirement with modest or no pension provision then it is imperative they understand what other ways are available to finance their retirement. There is a strong argument for eventually including housing and other significant wealth on the dashboard.
Maps also has responsibility for PensionsWise. Retirement is changing, people are working longer, pension freedoms give greater choice but create more complicated solutions as to the order in which the assets that form part of an individual’s retirement wealth will be used. If the individual is going to be dependent on state benefits, they need guidance on the impact certain decisions regarding the use of what little wealth they have are on their benefit entitlement.
My view is that if Maps is to reach its 10-year targets, PensionsWise needs to evolve into RetirementWise to ensure those who are retiring have the financial foundations to cope with the retirement they face.
Maps wish to encourage organisations of all sizes from all sectors to help deliver its goals. This is an opportunity to shape the future.
The next step is the development of its next corporate strategy for the years 2021 to 2024. All those working in all areas of financial services need to keep an eye on what Maps is encouraging and respond accordingly.
If the financial wellbeing targets are achieved, up to 13 million people will be more engaged with financial services in one form or another. Not all will engage with all sectors. What, for instance, will their expectations be? More importantly, how will those in financial services adapt to meet those expectations?
We need to help Maps chart the course that will direct people through their later life.
Bob Champion is chairman of the Air Later Life Academy