Be Pension “Wise”
From April, savers will, for the first time, be able to take their pensions in cash. As part of these reforms, savers will be offered a free half-hour of guidance from a new Government service called Pension Wise. Chancellor George Osborne used last year’s Budget to announce everyone aged 55 and over would receive a ‘guidance guarantee’ – a free 30-minute talk with a “pension expert” when they accessed their pension.
The help is supposed to ensure that anyone taking a pension is given all the information they need before making any important decisions. Guidance sessions can be either face-to-face, over the phone, or on the internet. Around 300 workers at Citizens Advice will provide the face-to-face help. Around 40 at Londonbased charity the Pensions Advisory Service will give the telephone guidance. In addition, the Treasury, which is in charge of rolling out the entire service, is working on a website. Around 300,000 people a year are expected to take the help. As the April implementation of the guidance draws closer there are concerns that pensioners could be passed through too many layers of guidance that will mean they opt out of the service and end up making a poor retirement decision.
Stuart Read, pension expert at Sabre Financial, warned that the system would be confusing for retirees who may find themselves passed from person to person. The free retirement guidance set for launch under the government's pension reforms is unlikely to deliver a one-stop solution for savers, who may be passed through three stages and then still urged to seek Independent financial advice.
‘They may see a Citizens Advice guide, then a more expert person and still want to speak to TPAS and in the end [TPAS] will say go and seek advice. It’s not good at all,’ he said. ‘The idea of guidance is to help people finalise where they are in terms of their retirement…we do not want people to be put off.’
‘Consumers are already confused about the difference between guidance and advice, and the difficulty with Citizens Advice recruiting people to provide guidance without a minimum standard of qualification and experience is that those who opt just for guidance will potentially be put at risk,’ he said. ‘Consumers need to understand the limitations of the guidance.’ ‘It is absolutely right that we invest in helping people make the best decisions with their retirement savings,’ Until now, there has been no help with the complex decisions people face when they reach pension age and at last, this is start to an independent source of help to point people in the right direction.’
If you would like to learn more about any of the points raised in this article, please contact Shaun Bell or Stuart Read at Sabre Financial on 01548-856444 or via email at firstname.lastname@example.org or email@example.com .
By Sabre Financial | Monday, February 02, 2015