People planning their retirement – or what to do with their pension pot – have been warned that the government’s new ‘pension guidance’ service, albeit helpful, will be nowhere near as good as taking professional advice.
Retirees will also have no comeback if they make the wrong decision with their money, says think-tank the International Longevity Centre (ILC).
Their research also revealed that just four in 10 people aged over 55 planned to take professional financial advice over their pension pot.
The government-backed Pension Wise guidance service is set for an April launch this year, but concerns are already emerging that those retirees, and those aged 55 and over, who plan to access their savings, will assume the information they receive from the guidance service equates to advice.
While a financial adviser will be able to assess an individual’s needs, and then suggest or even implement solutions to achieve the client’s goals, the guidance will be an information service that simply sets out generic options.
Most importantly, retirees using a professional adviser will have a means of redress if they lose money due to poor advice, as financial advisers are covered by the Financial Services Compensation Scheme (FSCS).
Pension Wise employees are not technically providing advice, just guidance, and so are therefore not covered by the compensation scheme.
Speaking at a debate organised by the ILC, Maggie Craig of the Financial Conduct Authority (FCA) said those opting against taking professional advice but taking guidance would be responsible for their own financial decisions.
“[We must be sure] we talk [to people] in terms of what [guidance] will do and what it means.”
“It will tell them what their options are and what the consequences will be, but it will not tell them what to do and there are not any redress rights.”
Some pension experts have pointed out that it is unhelpful that the two organisations delivering Pension Wise – Citizens Advice Bureau (CAB) and The Pensions Advisory Service (TPAS) – both have ‘advice’ in their title.
- Here at Lifetime we have a specialist Retirement Planning department. Anyone seeking professional advice on their pension pot should telephone 01226 208600 or email [email protected]