As part of its Pensions Upheaval, the Coalition has revealed the services to whom retirees can turn for free face-face guidance over the new pension rules.
The Citizenís Advice Bureau (CAB), an independent charity, will provide free, objective advice to anyone of pensionable age at agencies up and down the nation, with the government-subsidised Pensions Advisory Service (TPAS) offering counsel via a telephone service.
Announced in the budget earlier this year by George Osborne, the new rules are intended to provide pensioners with greater awareness and freedom on how to manage their savings. Osborne has stated his intent for pensioners to be self-sufficient when it comes to the handling of their pension pots, stating that this is ìkey to our long term economic planî.
The new rules offer over-55s greater flexibility with regard to accessing their pension pots, enabling them to use their savings to aid relatives or pursue whims as they please. Additionally, the 55% rate of tax levied on any pension savings left to children or grandchildren has been brought to an end. These are just two of the key new rulings brought in by the chancellor, whose pensions reforms have been widely commended.
Dr Ros Altmann, pensionís expert, said: ëThe Governmentís changes have the potential to help millions of pension savers make better use of their pension funds. Being free to access their money freely as they need to, rather than being forced to buy particular products, will be very popular.í
However, the scale of reform is vast and possibly perplexing for many people approach pensionable age; for the potential Altmann highlights to be realised, this advisory service is key. Termed the ëGuidance Guaranteeí, the scheme allows savers, possessing a defined contribution pension, the legal right to a free session on what options are available to them. Coming into action in April 2015, it is hoped the free advice will enable elderly folk to be acutely aware of the details of the new rules, such as the cessation of obligated annuities.
“These organisations have years of experience dealing with a variety of consumer issues and are well placed to be accessible to everyone who reaches pension age and feels they would benefit from the guidance:” said George Osborne
ìThis is a big step forwards in ensuring the pension revolution announced in the Budget will have a meaningful impact on pension savers:î asserted Dr. Altmann.
ìBoth the Pensions Advisory Service and Citizens Advice have longstanding experience in helping the public with financial issues; and it is really important that people do trust the scheme, other they remain at risk of stumbling into poor decisions.î
Citizens Advice chief executive Gillian Guy lauded the notion of accurate counsel guiding pensioners toward financial stability and peace of mind in their later years.
“People who have diligently saved year after year towards their retirement deserve to choose how to make the most of their pension pot and good guidance is central to helping people make the right decisions for them.”
The Money Advisory Service ñ A surprise absence?
As valuable as the free advice sessions could prove to be when they come into play next April, one notable absentee is the highly regarded Money Advice Service (MAS), as the government chose to exclude them from its list of pension advice providers.
Although touted as one of the main contenders, the government has omitted the MAS from any legislature, even in an online capacity, with the government designing its own online service as part of the ëGuidance Guaranteeí scheme.
MASí chief executive, Caroline Rookes, spoke graciously on the MASí omission: ìWe are pleased that we are at the heart of the delivery team, working to develop the new guidance service. Our experts are seconded into HM Treasury, playing a key role in helping to build the online part of the service and develop the guidance which will be provided to customers. The Treasury have made it clear how much they value the contribution we are making.
ìAt the MAS we are developing more extensive help for people aged 55 and over, to supplement the support they will get from the new guidance service. This will include help on budgeting for retirement, guidance on the different options and products available and a new annuities comparison table.
Critics have appeared disillusioned with the governmentís choice however, which is believed to have been made on the back of Treasury select committee chair, Andrew Tyrieís comments questioning the suitability of the MAS as candidates back in July.
ìAs the large well-funded organisation in this field, you would have expected them to be the lead partner in the delivery of this important ëmoney adviceí service, co-ordinating the activities of the other smaller bodies,î said Malcolm McLean, senior consultant at Barnett Waddingham, pension consultancy firm.
Mr Mclean, a former chief executive at TPAS, lamented the potential strain on his former company, questioning their ability to perform the duties now expected of them.
ìIt means that a considerable burden now falls on TPAS. They have the knowledge and experience to do this task, but not the resource capacity currently to handle the numbers of cases that may well come their way over a short period of time.î
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