View more on these topics

MM leader: Osborne’s liberation and the empowerment of savers

Chancellor George Osborne’s proposed pension reforms look like heralding a transformation of the savings landscape. Allowing people to access their pension funds from age 55 will be an attractive option for many and early polling suggests big support for the measure.

But with this new flexibility comes responsibility and a significant transfer of longevity risk from the insurer to the individual. Osborne declared that everyone would have access to “free, impartial, face-to-face advice” to help them with what may be a complicated decision. Budget documents clarified that this would in fact be guidance, rather than “advice”, although Conservative ministers continue to confuse the situation. It will be set-up through £20m of Government funding plus an unspecified levy on pension firms (so not free as these costs are likely to lead to extra fees).

We think this will open up a huge opportunity for advisers to offer professional advice to many individuals who will need far more than the generic guidance likely to be on offer through the Government’s scheme.

Our Budget columnist Colin Jelley last week declared that the Chancellor’s pensions bombshell had redefined financial planning and there looks likely to be significant new strategies to offer clients approaching retirement.

The empowerment of savers triggered by the Budget is also a great chance to promote the benefits of financial planning. These new freedoms mean it is even more important that individuals think carefully about evaluating their financial position, developing a plan, implementing it and then regularly reviewing it.

Has Osborne killed off the annuity market? Probably not. A secure income for life is likely to be an attractive option, although you would expect a significant fall in the share of the market annuities currently hold.  

Will this unlocking of pension funds create a buy-to-let boom? Again, probably not. The tax implications of taking a sum large enough to invest in a sizeable deposit are likely to be restrictive, although concern about the risk involved could put BTL regulation back on the agenda.

Osborne’s pensions liberation will entrust savers to make the best decision for themselves about what to do with the money they have accumulated.

Many will need a professional regulated adviser to ensure they make the most of their new found freedoms. This could turn out to be a great Budget for advisers and their clients. 

Recommended

Justice-Fine-Ban-Court-Gavel-Judge-700x450.jpg

SFO to charge three ex-Icap brokers over Libor rigging

The Serious Fraud Office is to charge three former Icap brokers with fraud today over allegations of Yen Libor rigging. Danny Wilkinson, Darrell Read and Colin Goodman are facing allegations of conspiracy to defraud between August 2006 and September 2010. Criminal proceedings against the men have been started today, with the first appearance and charges […]

Alistair-Conway-outdoors-in-2013-700.jpg
1

James Hay posts 25 per cent profit drop despite sales boost

James Hay saw profits fall 25 per cent in 2013 from £9m to £6.7m, due to lost revenue on maturing Sipps and £3.1m in IT costs associated with product development. James Hay parent IFG Group posted the results this morning. The results say: “Revenue was marginally down on the previous year as the loss of […]

FCA-FSA-Building-700x450.jpg

FCA fines and bans insurance broker for submitting false documents

The FCA has banned a director of an insurance intermediary firm and fined him £7,200 for submitting false documents to insurers. Philip Eley, a director at Eley Insurance Services Limited, deliberately falsified no claims discount letters relating to 10 customers’ policies and submitted them to an insurer. Eley Insurance Services is an insurance intermediary covering […]

Savings-Money-Currency-Business-Finance-700.jpg

Lighthouse makes £310,000 redress provision following £1.6m loss

Lighthouse Group made a pre-tax loss of £1.6m in 2013, compared to a £4.6m loss in 2012, as the national advice firm made an additional £310,000 redress provision. The group’s annual results, published today, say the £1.2m it set aside for a review of Arch cru sales has proved sufficient. However, Lighthouse has made a further […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There is one comment at the moment, we would love to hear your opinion too.

  1. Free advice?

    I’m not giving advice for free and taking on professional risk!

Leave a comment

Close

Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm

Email: customerservices@moneymarketing.com