Pension Wise fail to give guidance on the pension reforms?

7 Apr 2015 | Comments: 0 | Author: Ryan Smith | News

With the introduction of the pension freedoms this week, new reports show that there are less than 300 advisors available to help millions of people.

The sweeping pension reforms that allow pensioners to access their entire private pension funds, with no caps or restrictions have finally been introduced this week.

Following worries about pensioners blowing through their cash or under-estimating how long their retirement might actually last, the government launched Pension Wise, offering free guidance on the pension freedoms with the help of Citizens Advice and the Pensions Advisory Service.

One advisor for every 7,000

But despite offering people face-to-face guidance if they want it, there is estimated to be just one advisor for every 7,000 people eligible to access their savings.

Because the guidance offered through Pension Wise cannot be constituted as formal advice, there is also a worry that pensioners will simply follow the blanket guidance, without taking into consideration many of their own personal circumstances – this could again lead to financial problems in the future.

Now the worries about the lack of advisors has led to a new concern: that pensioners unable to get face-to-face guidance before they want to access their funds end up turning to unscrupulous firms offering ‘free consultations’. Many of these firms are unregulated, and are often scams to cheat pensioners out of their hard-earned saving funds.

New concerns

Ros Altmann, the Government’s older workers’ tsar has expressed concern with the pressure the service is expected to face: “The Citizens’ Advice Bureau has never covered pensions before, so it is a challenge to set it up from scratch”. She also believed that pensioners unable to receive the guidance could end up making “rash and irreversible decisions”.

Local Financial Advice believes you should seek financial advice, but it’s more important now than ever to speak with an FCA-regulated FA when considering your pension freedoms.

As pensions Minister Steve Webb has warned: “You can spend years saving into a pension only to find yourself tricked out of it in the blink of an eye”.