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Pensioners guaranteed independent advice on their choices

Savers will be given access to free financial advice when they reach the retirement age of 55

21 July 2014

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Savers will be given access to free financial advice when they reach the retirement age of 55

Free guidance for pensioners, available from from 1 April 2015, will be provided by impartial organisations rather than service providers, the Treasury has announced.

Following a consultation with the financial services industry, the majority of respondents said that consumers would be less likely to trust the advice of organisations and individuals with a vested interest in selling them products or services.

The announcement comes after the chancellor, George Osborne, said in his 2014 Budget that pensioners can access their whole pension pot from age 55, and will not have to buy an annuity.

On 21 July, he announced: "We're making sure that people have the right support to make their own choice about how best to finance their retirement and I'm pleased to confirm that everyone with defined contribution pension savings reaching pension age will get free and impartial guidance on their range of available choices at retirement."

Advice will be given through a range of channels including online, phone and face to face, by organisations including the Pensions Advisory Service and the Money Advice Service.

Kate Turner, head of advice policy for wealth adviser Towry, said: "This advice will often need to go beyond the level of detail provided by the likes of the Money Advice Service and the Pensions Advisory Service."

She said that everyone should have a "long-term financial plan in place" to avoid retirement funds being "frittered away".

The Treasury said that 18 million people will benefit from the changes from 1 April 2015, and 300,000 individuals a year with defined contributions savings can access them as they wish. Savers will be able to take out the first 25 per cent of their pensions tax-free.

The Financial Conduct Authority has also published a paper that consults on the elements of the guidance guarantee for which it will be responsible. These include setting and monitoring the standards with which guidance providers will have to comply; making and enforcing rules on how contract-based schemes signpost the guidance services; and adjusting the FCA's existing conduct rules to support the guidance guarantee and in response to the new flexibilities.

Categorised in:

Tax & Wealth structuring Pensions