Half a million savers could be affected by hurried execution of pension reforms
The government’s mismanaged and rushed pension reforms could see up to half a million people affected as a result of the imminent unlimited access to pension pots.
With the general election looming, which in my view is intrinsically linked to the government’s haste to roll out these changes, individuals will be given unrestricted access to their pension savings in just two weeks’ time. However, I am deeply concerned that the government’s guidance service, Pension Wise, which is being set up to help savers through the changes and their impact, is not as yet fully prepared.
They are cutting it fine – only today the phone number was confirmed to book an appointment, but the advisor directory, amongst other things, are still not complete.
There is also the guidance service itself to consider, which, as its name suggests, is ‘guidance’, not advice. Hence a one-size-fits-all guidance approach to retirement savings is highly likely to result in a host of serious consequences in the future. Particularly as the Treasury predicts that half a million people (up from the original projection of 320,000) will look into accessing their pension pots from April 6th, making way for a great deal of ill-informed decisions which could jeopardise people’s retirement and affect economic growth in the longer-term.
Although, many individuals will be encouraged to seek independent financial advice by Pension Wise, which is clearly a move I champion, there is still the strong concern that they won’t be able to receive the financial advice they require.
This is predominantly due to the Retail Distribution Review, which in effect left an advice ‘black hole’ as a large number of high street banks left the advisory market, and some of the major advisory companies are now solely offering ‘restricted’ advice. Together with the fact that numerous independent financial advisers will now only work with clients who hold investable assets above £50,000, as anything under this threshold is deemed not attractive enough.
Consequently, savers who require independent financial advice the most, will be forsaken by IFAs ahead of the introduction of these landmark pension reforms, which could leave them vulnerable as pension scammers wait in the wings to cash in.
I therefore cannot stress to people enough the importance of remaining extremely vigilant if contacted by someone who claims they can liberate their pension, and to consult specialist financial advice before making any decisions.
The fact of the matter is, everyone has different circumstances, and financial goals and ambitions that cannot be appropriately addressed within generic guidance given by Pension Wise. Mistakes made within a personal financial strategy can be extremely complex to overcome and have life-shattering implications.
As such, consulting with an independent financial adviser is the best way for individuals to devise and manage a tailor-made retirement planning strategy, in order to secure financial security in later life.
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