Government’s ‘Pension Wise’ guidance will be too generic
The brand name of the government’s pensions guidance service announced by Chancellor George Osborne in last year’s Budget has been unveiled as ‘Pension Wise’, with the tagline ‘Your money. Your choice’.Operated jointly by the Citizens Advice Bureau and The Pensions Advisory Service, Pension Wise will offer face-to-face ‘guidance’ – not advice! – for the over-55s, with pilot schemes running between now and April to gain feedback from participants in defined contribution pension schemes.
As part of a series of pension freedoms introduced, some of which include allowing over-55s unlimited access to their pension fund in cash, and removing the need to purchase an annuity, Pension Wise was set up to offer free and impartial information for retirees.
However, a ‘one-size-fits-all’ approach to something as vitally important as an individual’s retirement income could result in a host of seriously unintended consequences – and, to my mind, defies the whole ethos of a pension.
Indeed, as I recently commented in a media statement, “In general terms, our advice is to resist, where possible, the temptation to access pensions to avoid the risk of compromising your retirement ambitions, making hasty decisions, and facing hefty tax charges.”
Despite the Chancellor’s promise of a ‘guidance guarantee’, which is in effect a 30-minute chat with an ‘expert’, the fundamental flaw lies in the fact that Pension Wise is wildly, and potentially dangerously, generic.
There are also concerns regarding the level of expertise of the 300 people who have been employed to handle an anticipated initial 300,000 enquiries to Pension Wise, despite the government claiming they will receive ‘rigorous training’ and be thoroughly tested before speaking to members of the public.
In my view, giving people more rights with the introduction of pension freedoms means giving them more responsibility, and if the government is unable to provide accurate, impartial financial advice to all those who request or require it, then lifting restrictions on pension access restrictions is a mistake. But it is happening regardless…
Each individual has different circumstances and financial needs, wants and goals that cannot be appropriately addressed within non-specific advice given by Pension Wise. Errors made within a personal finance plan can be extremely tough to overcome and have life-shattering implications.
As such, clearly, consulting with an independent financial adviser is by far the most beneficial way for individuals to devise, implement and manage a bespoke retirement planning strategy. This is, always has been and always will be, the best way to secure your financial security in retirement.
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