Five Questions On: Pensions advice

 

We're all going to get free advice from the Government, aren't we?

Not exactly. Chancellor George Osborne announced this week that "guaranteed guidance" on pension choices, offered as part of the new relaxed pension rules that come into effect next April, will be offered by a range of independent organisations such as the Pensions Advisory Service and the Money Advice Service.

That's a good thing, isn't it?

It's certainly a good thing for the advice to be completely removed from the firms that provide pensions. That'll put to rest the years we've endured annuities being sold by pension providers when they gently eased people into the firm's own products, irrespective of whether they were the best or most cost-effective option.

So what will happen in the future?

As you may recall, the Government has freed us from the requirement to buy an annuity. Instead we will be allowed to do what we like with our pension pots when we reach 55.

Doesn't that sound a little foolhardy?

That's where the advice comes in. Mr Osborne said: "We're making sure that people have the right support to make their own choice about how best to finance their retirement. Everyone with defined contribution pension savings reaching pension age will get free and impartial guidance."

Will they?

There's the rub. The move was welcomed, but some warned that it may actually be hard to put into practice for the estimated 18 million people the rule change affects. Pensions expert Ros Altmann said: "The guidance could be the start of a whole new industry, which will ensure people have a better idea of how to plan their finances and how to assess their retirement options." But Neil Lovatt of Scottish Friendly, warned: "It's a solution that cannot possibly cope with the level of demand, which leads me to believe that it won't be implemented properly."

Independent Partners: 10 top tips for retirement. Get your free guide here

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