Pensions minister Baroness Ros Altmann says it would be “ridiculous” to scrap rules that force people with guaranteed benefits to take regulated advice before accessing their savings using the retirement freedoms.
The Government has mandated that savers with safeguarded benefits worth more than £30,000 get regulated advice before taking their pot as cash. This includes both defined benefit pensions and policies with guarantees attached.
However, providers have faced criticism from national newspapers for blocking people from accessing their money, with “expensive” advice costing up to £1,000 listed as one of the barriers facing consumers.
On the back of this, the Personal Finance Society called on the Government to ditch the advice requirement.
But speaking to Money Marketing, Altmann says: “If you have got guaranteed benefits, you have got to have some kind of advice.
“It is ridiculous to suggest that people should just have some kind of free-for-all, but then it depends what kind of advice, who needs to give it, how people receive it and when they receive it.
“We certainly haven’t considered the idea of just getting rid of the advice requirement; there is no way we would consider that.”
PFS chief executive Keith Richards says the trade body has reversed its position following talks with the pensions minister but is looking for concessions in return.
He says: “Government reforms have provided the opportunity to use pension pots to address short-term objectives as much as their original intention to support a standard of living in retirement.
“The risk of short-term gain leading to long-term pain is an obvious unintended consequence that must be addressed.
“The inclusion of guaranteed benefits adds both complexity and risk, which means professional advice is essential. There is, however, an urgent need to amend process, expectations and future treatment of such mandated advice to better meet needs of consumers who might not want advice but have been forced to seek and pay for it.”