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Budget 2014: £20m from Govt and provider levy to fund at-retirement ‘right to advice’

Chancellor George Osborne has revealed a new “right to advice” as part of an overhaul of the pensions and savings system.

In his Budget speech today, the chancellor set out that people retiring with a defined contribution pension scheme should be offered “free, impartial, face to face advice”, and should have the ability to shop around for the best deal when it comes to buying an annuity.

The Government will inject £20m to fund the initiative, plus will impose an unspecifed levy on pension providers and trust-based schemes.

Osborne said: “We are going to introduce a new guarantee, enforced by law, that everyone who retires on these defined contribution pensions will be offered free, impartial, face-to-face advice on how to get the most from the choices they will now have.

“Those who still want the certainty of an annuity, as many will, will be able to shop around for the best deal.

“I am providing £20m over the next two years to work with consumer groups and industry to develop this new right to advice.”

The full Budget document says that to deliver this, the Governement will introduce a new levy on pension providers and trust-based pension schemes to offer this “guidance guarantee”.

Osborne earlier revealed a radical overhaul of pension rules which will mean that from April 2015 anyone over the age of 55 will be able to take their entire pension pot as cash.

He also set out that cash Isas and stocks and share Isas will be merged, with the annual allowance boosted to £15,000.

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Comments

There are 7 comments at the moment, we would love to hear your opinion too.

  1. “free, impartial, face to face advice”,

    Maybe he should work for free as well.

    Once again politicians peddle the idea that advice has no value.

  2. Free to the end user… I’m assuming the £20m ‘pot’ will meet the cost (or some of the cost!) of the advice.

    Though lets not forget it’s paid for by taxpayers.

  3. Surely Mr Osborne needs to check his documentation. The budget suggests that the money will be available for ‘free and impartial face-to-face guidance at the point of retirement’.

    Guidance isn’t advice Mr Osborne and you are not doing anything to help the understanding of the general public that what you actually mean is that someone will go to the likes of the CAB or money advice service, speak to someone who knows jack about pensions, receive information only and then have to make their own decision when they’re none the wiser. What if that’s the wrong decision, the general public will think that they have received advice when they haven’t because you’ve just told them they’ll get advice.

    Looking on the bright side there’s more chance of organising a drink at a brewery with a slight cut in beer duty I suppose.

  4. A bit of research on the internet I just did suggests that 3.3 million people hit the state pension age between 2013 and 2018. If you pro rata that, that’s 2.64 million people from 2014 to 2018. Admittedly, they won’t all have DC pensions, but “free, impartial face to face advice” for all of them? Really?

    I would suggest that they will spend the £20m trying to work out how to do it, and then find out that it can’t be done.

  5. According to the ONS (10 Dec 2013) there are an estimated 722,000 people turning 65 in 2014, and the number seems to hover between 670,000-760,00 each year for the next 10 years. Whilst not all of these will have pensions, many will – all seeking “at retirement” advice. Even if only half had a maturing pension that’s still about 300,000 people a year… across 20,000 advisers (?) that’s 15 each.

    Perhaps 20% of the cases are complicated (across the population), whilst I doubt that the £20m won’t be going to advisers but to MAS or something similar. If there are 20,000 advisers, £20m splits 20,000 ways as £100 each…..

  6. This has fiasco written all over it. Wouldn’t it be better to offer vouchers redeemable for cash to IFAs for cooperating with the scheme?

  7. Doh… typo…£1000 each

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