The government will merge Pension Wise and The Pensions Advisory Service (TPAS) to create a new pension guidance body.
In today's Budget, the government outlined plans to merge the two guidance bodies and close the Money Advice Service (MAS).
In a consultation paper on the merger, the government said it wanted to create a new body.
The paper said the new body would still be funded by a levy on financial services but said the merger would lower the cost of the levy.
‘The new pensions guidance body and the new money guidance body will be funded by levies on the financial services and pensions sectors,’ it said.
‘By removing duplication and reducing overheads, the new delivery model will allow more funding to be channelled to the front line, while also reducing the burden on levy payers.’
The government will also create a new body to replace MAS to help people with debt issues. This will be a ‘slimmed down money guidance body’ which will work with third parties to fill any gaps in guidance.
The government said that legislative changes are likely to take six to 12 months, and that with a ‘reasonable transition period’ the new model would come into effect in April 2018 at the earliest.
MAS, Pension Wise and TPAS will continue to provide guidance to consumers for at least the next two financial years.
Earlier this morning, reports suggested that MAS would be scrapped entirely. MAS was dropped from delivering the guidance guarantee in October 2014, six months before the pension freedoms came into force.
The new pensions guidance service will provide guidance on the second hand market in annuities when it comes into force 2017, as well as guidance on accessing the pensions freedoms.
Levies from the Financial Conduct Authority (FCA) will fund the new money guidance body, as they did with MAS, while the new pensions guidance body would be funded through levies from both the FCA and The Pensions Regulator.
‘Officials will work with the FCA to explore the possibility of combining the current money advice levy and debt advice levy into a single levy,’ the government said.
‘However, responsibility for setting the rules, and decisions on the most effective way to collect the levy will be a matter for the FCA.’
The consultation paper also said MAS had a 'misleading' name because it could not actually provide advice.
This echoed concerns raised by pensions minister Ros Altmann earlier this year.
'The accountability arrangements underpinning MAS were not sufficiently clearly drawn and both the FCA and the Treasury think it is vital that the new body has a clear accountability regime,’ the paper said.
The government said that the generic objectives MAS has like promoting awareness of the benefits of financial planning had been too broad.