Millions of hardworking workplace pension savers risk missing out on free targeted support with important retirement decisions because of how their pension is regulated, People’s Pension has warned, as it calls on Government to address the gap between contract and trust-based schemes.

People’s Pension has backed the introduction of targeted support as a landmark Government reform that has the potential to close the advice gap between information and regulated financial advice, giving ordinary savers better access to the sort of help they need to make complex pension decisions.

However, the new framework only applies to FCA-regulated contract-based pension providers. Trust-based workplace schemes, including master trusts regulated by The Pensions Regulator (TPR), sit outside the FCA framework, meaning their members cannot access targeted support through their scheme.

People’s Pension warns this could result in people facing very different levels of help when making the same retirement decisions, based not on their individual needs but on the type of pension scheme their employer selected for them.

Targeted support could make a significant difference at key points throughout a saver’s pension journey. This could include giving someone a stronger steer if they are under-saving, helping those approaching retirement understand how they might generate a retirement income, or identifying when someone may be withdrawing at a rate that risks their pension running out.

While trustees may currently be able to provide forms of personalised support akin to targeted support, People’s Pension says the absence of a clear legal and regulatory framework creates additional complexity and risk for trust-based schemes. In practice, this creates a strong compliance and cultural barrier to trustees offering support that could be perceived as advice.

People’s Pension is calling on Government to introduce a TPR-supervised targeted support framework for qualifying occupational pension schemes, allowing trust-based pension savers to access equivalent support and protections to those available through FCA-regulated schemes, while recognising trustees’ different legal and fiduciary responsibilities.

David Meliveo, Chief Commercial Officer for People’s Pension, said: “Targeted support is a fantastic opportunity to help millions of people with their pensions who are never likely to have a traditional financial adviser.

“We cannot end up with a two-tier system where the vast majority workplace pension savers miss out on targeted support simply because their employer chose a Master Trust rather than a Group Personal Pension. People do not think about whether their pension is FCA or TPR regulated when deciding whether they are saving enough, how to generate a retirement income or how to make their money last through their later life. They just want straightforward help to make a better decision.

“We want to be able to offer People’s Pension members the same kind of targeted support that contract-based providers are now developing. Government has an opportunity to create a level playing field that allows trust-based schemes to do that safely, so the type of pension someone’s employer chose does not dictate the quality of help they get.”