Huge numbers of pensioners are not yet able to book advice sessions that will aim to enhance their understanding of the imminent alterations to pension schemes.
The government pledged to create a service that will offer unbiased expertise to those in need of help. The changes are set to be implemented on April 6th, but the phone line for booking these sessions is still not available to the public.
The facility will help those savers aged 55 and above who are torn between cashing in on their pension or maintaining an annuity, as well as advising on other subjects.
The Treasury department have stated that the introduction of the service is on time and that they are still addressing a few issues at present.
A spokesperson from the department commented: ìWe have been piloting sessions of the Pension Wise service and gathered feedback from users and guidance specialists in order to ensure it is as good as possible for when the pension changes come into force in April.î
They went on to say: ìPeople will be able to begin booking their telephone and face-face appointments in the next few days. People should remember, though, that 6 April is not a deadline; they have plenty of time to seek the right guidance and advice of these important decisions.î
The alterations will mean that from April 6th savers from 55 years old and above will able to withdraw any amount they wish from a Defined Contribution (DC) pension facility and many of those with a Defined Benefit scheme will be able to move to a DC facility.
Furthermore, the alterations to tax will allow people to give their pension savings to their descendants with less hassle whilst every retiree is to be offered free guidance through the Pension Wise service. Moreover, though current annuity holders will not immediately benefit from the freedoms, the intention is to implement changes that will allow them to sell their annuity facility.
There is ambivalence amongst consumer groups and the pension industry about whether the alterations should be welcomed. For example, ëWhich?í has stated that the increase in the flexibility of pensions is a good thing but it comes with additional complications.
Richard Lloyd, the executive director at the consumer advice service, stated: ìPeople approaching retirement are not going to turn into financial experts overnight and so, with more options on the table it is vital people take their time to make the new freedoms work for them.î
The director general at the Association of British Insurers echoed these cautionary sentiments: ìDonít be tempted to dash for the cash, but take time to consider carefully your options-especially as rising life expectancy means we can expect a longer retirement.î
The new rules will mean that any sum of money taken from a pension facility will be considered income and thus there will be tax effects. If a large amount of money is withdrawn, that individual may find themselves in a higher income bracket and thus a significant portion of their original savings could be taken by the government.
Further to this, a number of pension companies are worried about the increase in risk and costs that the freedoms will bring. More than 50% of occupational pension facilities do not yet know whether they will give their consumers access to the new freedoms and 15% have stated definitively that they will not.