Is the Government wising up to pensions?
The Treasury has rebranded its ‘guidance guarantee’.
The ‘guidance guarantee’ was one feature of the new pension tax regime on which the Chancellor of the Exchequer, George Osborne, placed considerable emphasis when he made his surprise Budget announcement in March 2014. The initial consultation paper said “…choice on its own is not enough. Consumers need to be able to make informed decisions. We will therefore guarantee that individuals approaching retirement will receive free and impartial face-to-face guidance to help them make the choices that best suit their needs.”
Although Mr Osborne used the word ‘advice’ in his Budget 2014 speech, it became clear very soon that free advice was not being offered. Similarly the ‘face-to-face’ aspect was quickly watered down to less expensive forms of communication, such as a telephone based service. Initially the government said that The Pensions Advisory Service (TPAS) and the Money Advice Service (MAS) would be the two main bodies to supply the guidance. However, in October 2014, less than six months before the new rules begin, MAS was replaced by the Citizens Advice Bureau.
In January 2015 the Treasury unveiled the name and logo of the new pensions’ guidance service: Pension Wise. In theory this service could have to deal with “over 300,000 individuals a year” and “will be a first port of call for consumers” approaching retirement with defined contribution pension plans. In practice many pension professionals are sceptical about what Pension Wise can deliver. Not only are there question marks over finding and training appropriate personnel in such a short timeframe, but there are also concerns that what many near retirees want is advice, not a guidance shopping list from which they have to choose. Any complaints about the guidance will go to the Parliamentary and Health Service Ombudsman, rather than a financial services regulator/ombudsman.
If you are nearing the point at which you want to start using your retirement fund, then we believe your starting point should be to take professional advice. Pension Wise will not deliver on-going advice based on a full knowledge of your personal circumstances. Although it will be free, it will be generic information and, more importantly, a one-off exercise. Next year, when your 12 months old pension arrangements need review, you may need more detailed information.
Information is based on our current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from, taxation are subject to change.
The value of investments and income from them may go down. You might not get back the original amount invested.
Past performance is not a reliable indicator of future performance.
A pension is a long-term investment. The fund value may fluctuate and can go down. Your eventual income may depend upon the size of the fund at retirement, future interest rates and tax legislation.