Before we know it, we will be celebrating the first year of pension freedoms. It has been an interesting experience for regulators, providers, advisers and clients alike.
Certainly, most advisers will have experienced an almost unprecedented level of interest from consumers excited by the prospect of taking their pension fund and doing with it exactly as they choose. The Government told us it trusted consumers with their own money and that those who were prudent enough to save for old age would remain prudent in the way they used their pension pots.
We do still have some key issues to iron out. For example, the insistent client remains to be dealt with (other than by simply saying “no”) in a way that avoids later potential regulatory censure and unfavourable ombudsman rulings. Those advisers who have been around the block a few times know full well that what is said by the regulator today may not constitute a robust defence against an ombudsman decision later (that’s right, we simply do not trust them).
Meanwhile, consumers are still uncertain about the differences between advice and guidance. They are also still uncertain about why they should be paying adviser fees to “rubber stamp” something they have already decided they want to do.
Layered on top of that are the real or imaginary barriers to access that the pension providers seem to put in place. You can actually feel real empathy with the poor consumer.
Indeed, I still do not quite understand how the Government can say it trusts consumers with their pension pots and then imposes a compulsory advice regime on those with pots below an arbitrary amount.
Nonetheless, it was interesting to read this month of some of the uses consumers have put their pension money to. We are told that fears of savers blowing their funds on Lamborghinis have proven unfounded, but how about a new set of teeth instead?
Apparently, many over-55s have been boosting their looks with dental implants, thanks to the help of their pension cash. Who would have guessed?
The rise of the “silver separators” is apparently to blame for this trend, with other types of cosmetic surgery also on wish lists alongside sit-on lawnmowers, Winnebago purchases and vets’ fees.
Above all this, however, one encouraging trend shines through. The most popular use of cash has been to pay off debts or buy property for children and grandchildren, simply shifting from one type of investment to another (despite the potentially damaging tax consequences).
So, having considered all the advantages and disadvantages with equal measure, I hope the freedom and choice changes are being used sensibly. If that is the case then let’s hope it continues that way, particularly when people start cashing in their annuity payments for a lump sum.
Nick Bamford is executive director at Informed Choice