Financial News

  • 22 July 2014, 8:05

Savers To Get Free Advice On Pension Pots

Millions of people are to be given free, impartial advice on how to make the most of their retirement savings.

It follows changes announced by the Chancellor in the Budget, which give savers more flexible access to their pension pots and crucially, not forcing them to buy an annuity, but allowing them to use their money as they see fit.

The radical pensions shake-up sparked concerns at the time this greater freedom could see pensioners blow their savings early in retirement and run out of funds.

Liberal Democrat Pensions Minister Steve Webb came in for criticism for suggesting that if pensioners wanted to "buy Lamborghinis" with their money they should be able to.

There were also warnings of fraudsters offering bogus advice and investment packages.

Acknowledging people needed to make informed decisions, the Government said it would guarantee "free, impartial face-to-face guidance" for individuals reaching retirement.

Mr Osborne told Sky News: "People want to have somewhere they can go to which is impartial.

"Then they will feel better equipped to make choices about which company they then go to, to buy a product that supports them in their retirement."

Assistance to savers will be provided by a range of independent organisations, including The Pensions Advisory Service (TPAS) and the Money Advice Service (MAS) and follows concerns consumers would not trust information given by organisations with a vested interest in selling a financial product or service.

In total, 18 million people will be able to benefit from the changes to pensions should they wish to do so, the Treasury said.

Pensions expert Ros Altmann, the Government's older workers' business champion, said: "The decision that guidance must be impartial and separate from the industry is a real game-changer and will help equip people to make the right decisions for them.

"The challenge is now firmly with the industry to develop the products that people need, rather than simply the products they wish to sell."

Caroline Rookes, chief executive of MAS said: "Planning for retirement is a crucial life stage, and it is important that people feel well-informed and confident in the decisions they make."

As part of the pensions overhaul, people approaching retirement will be given an estimate of when they might die.

A measure of life expectancy, linked to factors such as smoking, eating habits or socio-economic background, will be part of Government backed "guidance" to help pensioners plan how much to spend and save.

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