Daniel Shrimski (L) and Sarah Abood

Vanguard Australia has backed the government’s proposal to establish a local twin of the publicly funded UK pension guidance service Pension Wise, calling for “fire on all cylinders” to close the retirement advice gap.  

In its submission to the Treasury consultation on improving retirement outcomes, the US passive investing giant, which also runs a super fund locally, said Pension Wise has been shown to improve retiree confidence and financial literacy among UK consumers. 

“This has led to demonstratable benefits in the actions taken by customers which include increased engagement with their retirement and taxation planning, greater consideration of longevity factors, and considerations of how best to invest the money drawn down from their pensions,” the submission said. 

Vanguard Australia managing director Daniel Shrimski said a government advice service would certainly be an independent offering for consumers, but it won’t be able to do all the heavy lifting of retirement advice.  

“I don’t believe that something like this can solve the issue by itself,” he told Professional Planner. 

“I think it’s going to require – as it does in the UK – the whole spectrum of advice to still work with it. Be it guidance or comprehensive advice, or everything in between. 

“Allowing super funds to do more than what they do today is going to play a big part in reducing the gap on advice for Australia. That, together with the financial adviser industry that we already have, is going to be critical moving forward.” 

Shrimski said Vanguard is supportive of considerations being given to an agency like Pension Wise because boosting retirement outcome is a problem that will need all the help it can get. 

“There is a fairly consistent view from the industry and the government that there is a big gap [in access to advice], and we need fire on all cylinders to help close that gap,” he said.  

The idea had backing from consumer group Choice who suggested it in an earlier consultation on the Retirement Income Covenant. 

However, advice industry group the FAAA holds the opposite view. It said in its submission that while Pension Wise is a useful reference point, establishing an Australian counterpart will only be a “partial solution”. 

“It does not cover a wide range of issues that are important in retirement nor the delivery of financial advice. There is also no provision for an ongoing relationship which is important when circumstances change,” its submission read.  

The organisation’s chief executive Sarah Abood added that nine times out of 10 the service doesn’t give the consumer what they need. 

“It’s an extremely limited form of advice,” Abood told Professional Planner.