In 2014, George Osborne announced, “Support for savers is at the centre of this Budget,” introducing several new measures likely to have a major impact on pension holders. This April, perhaps the most significant measure announced from the 2014 Budget will come into force, allowing the over 55s to withdraw their pension savings from defined contribution schemes in full. While savings experts have welcomed this newfound freedom for pension holders, there are also concerns that many do not have access to advice and information about the new reforms.
“One thing I would worry about is people not having the correct advice and wanting to spend their pension pot,” admits Jonathan Bland, Director of Pension Geeks, which aims to make pension communications more accessible for UK savers. “There will be lots of technical jargon that will be released with the changes that people may be unaware of,” he adds, concluding, “I think it’s going to be quite baffling for some people.”
In light of the complex factors involved in understanding whether these new freedoms represent a prudent option for each individual, Pensions Minister Steve Webb has warned savers against making hasty decisions in April.
“Just taking a big deep breath on the sixth of April is the best advice I could give anybody,” Webb told the Financial Times, explaining that those who wait until autumn to review their options are likely to have more choice as market providers adapt to the new system and create new products.
Adding to this advice, Financial Conduct Authority Chief Executive Martin Wheatley has also underlined the growing risk of pension holders being targeted by fraudulent schemes, commenting:
“This is exactly the time when people need to be alert to the dangers of scammers offering opportunities that are too good to be true. Our ScamSmart campaign sets out the straightforward steps people can take to protect themselves and number one is if you get cold called about an investment opportunity, hang up.”
For now, savers are advised to contact the government’s free Pension Wise service for impartial advice on their options for the future under the new rules.
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