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Govt eyes £500 access to pension savings

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Treasury officials are looking at allowing savers to withdraw £500 of their pension savings to fund access to financial advice.

The plans come as part of the Financial Advice Market Review, launched earlier this morning.

The review, jointly led by the Treasury and the FCA, proposed the change as a way to make  advice more affordable for those approaching retirement.

Plans will be finalised by the Government, but it is expected savers would access around £500 of their pension roughly five to 10 years ahead of retirement.

Savers would also be required to use the funds for advice, although processes to monitor this are yet to be developed.

It is hoped that by allowing consumers early access to their pensions, they will be given more time to save ahead of retirement, or to gain more accurate expectations of their retirement.

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Comments

There are 8 comments at the moment, we would love to hear your opinion too.

  1. A £500 withdrawal to pay for advice. Rather than an adviser billing an adviser charge directly to the pension – as has been possible since the year dot.

  2. Yes agree Martin, can only assume its a £500 tax free withdrawal otherwise pointless!

  3. Lindsay Lockett 14th March 2016 at 11:14 am

    I can’t think of one client I have, or case I’ve not proceeded with, where this new scheme would have helped out. By the time we have a myriad of regulations in place to police this new rule and have to deal with inept insurers it will cost £500 of advice time just to “help” clients withdraw this £500, there will be noting left to fund the actual advice the clients wanted !

    To me this will end up the client having TWO lots of advice for one fee (capped at £500 – who decided that was sufficient) – one set of advice to agree / help with the initial extraction of £500, followed by the actual advice.

  4. I guess that means that there is no need for Pensionwise anymore. Excellent.

  5. Anyone who is seriously interested in taking retirement advice in the years leading up to retirement needs advice on protection, life assurance (just in case you do not make it!), investments and savings, Wills, mortgage, income and expenditure analysis etc. At times a complex relationship and a regulatory KYC requirement. Now as I understand it, pension fees (adviser charges) can only pay for advice in relation to the pension element and that certainly is not he be all and end all of planning for retirement. Furthermore £500 will not do it.

  6. And this delightfully means that those who may need the advice most while having smaller pots (i.e. basic rate pension contributors) pay more for access to advice than those who can more generally afford higher fees (higher rate and additional rate contributors). How very progressive.

  7. I believe this will only work on the clear understanding that this sum alone will not cover all that is required due to the ever increasing complexities, range of options, regulatory burden etc etc. If the general public are under the misunderstanding that £500 will get them everything, then they are being misled in the extreme. For this sum they will get a 1 hour meeting, a generic booklet and an outline of the things they need to consider with perhaps some general guidance. I for one will not be seeking out this type of client.

  8. “savers would access around £500 of their pension roughly five to 10 years ahead of retirement.”

    Oh that’s OK then. For a BRT payer this means that they would be left with £400 after tax (provided BRT stays at 20%). Another wheeze from Orrible Osborne to rob savings.

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