Free Pension Guidance At Retirement

Free Pension Guidance At Retirement.

The Treasury has confirmed plans, as announced by the Chancellor in Budget 2014, that free guidance will be available to all people at retirement looking at their pension options given the new flexible pension rules that start in April 2015.

The Treasury has snubbed insurance companies and financial advisers in favour of guidance being offered by the Money Advice Service (MAS) and the Pensions Advisory Service (TPAS).

MAS is funded by a levy on all regulated financial services firms
TPAS is funded by a levy on all pension schemes

What is Free Pension Guidance?

• Pension guidance will be offered by telephone or online.
• It is not advice.
• You will not be told which is the best option for you or which pension company to use. This is advice.
• You will not be told whether to us an annuity or use flexible pension drawdown from the funds. This is advice.
• You will not be whether you take you lump sum or not. This is advice.
• Guidance means you will have the options explained to you along with the risks of each and how to think about managing your pension income for future life expectancy.
• You are then free to make you own decisions or take professional advice.

Comment

Our concern is plain and simple. Guidance is possibly “the blind leading the blind”. From what we know, there are rarely full qualified advisers that work on the helplines for the above.

There has been over 40 pieces of legislation in the working lives of most people coming into retirement that affect your retirement decision and the pensions that you may have built up over the years. Making the wrong decision based upon people guiding you with little or no experience is a dangerous cocktail.

There is no liability for MAS or TPAS.

If you make a mistake it is you own problem, no claim can be made against either of the above statutory bodies.

Already, the Treasury Select Committee has raised concerns that some/part of the above bodies may not be fit for purpose.

We have always suggested that the way forwards should not be from industry funded quangos but a form of “financial aid” rather than “legal aid” be made available to those that cannot afford advice and then most people will get access to highly qualified financial advisers who then carry a liability for the advice (rather than guidance) that they give you.