The merger is set to take place within 12 months and will see the Money Advice Service (MAS), The Pensions Advisory Service (TPAS) and Pension Wise restructured as a single UK-wide pensions guidance body, following a further review.

Pension Wise was first launched 24 March 2015, so had only been running for just over a year before the decision was made to combine it to make an entirely new body. There has been criticism from the Association of Professional Financial Advisors (Apfa) that the organisations were duplicating their guidance services.

The new service will provide advice on pensions but will also identify gaps in the market so that people can access high quality debt and money guidance.

The new body will still be funded by a levy on financial services but the merger would lower the cost of the levy. Changes are likely to take around 6 to 12 months and along with a reasonable transition period the new model would not be ready until 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.

Both the new pensions and money guidance bodies will operate arms-length from the government, but the government said it would attempt to make the new bodies more accountable to the FCA and the Treasury.

The move was welcomed by Low Incomes Tax Reform Group (LITRG), as chairman Anthony Thomas, said: ‘Advice on money matters has previously been delivered in penny packets by bodies specialising in discrete areas, sometimes not well integrated with other areas which can affect financial decisions. 

‘In particular the interaction with tax and benefits can have major and long-term effects, often unforeseen at the time of the decision, and those without professional representation can be hard-pressed to find the necessary information and knit it together to find the best course to take.

‘After all, decisions about pensions are taken at a time when a person may yet have 20 or 30 years of non-working life to plan for.’