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MM leader: Tough talk on pensions misses the value of advice

Natalie Holt website

Has the rollout of pension freedoms been an almighty disaster? It depends on who you ask, with a gulf emerging between the two camps.

In the red corner, the Government and the consumer press are keen to berate providers and the wider financial services industry for not allowing savers to access their pension pot in the way they want.

In the blue corner are the insurers and the adviser community, much maligned for holding back the apparent tide of would-be retirees from a lifetime of instant wealth and happiness. Perhaps this characterisation is crude, but you get the idea.

The tough talk against those standing in the way of pension freedoms has been stepped up in a big way. The Government, keen to be standing on the side of consumers, has pulled no punches with its language over the last week. Pensions minister Ros Altmann has talked of her “disappointment” of firms that are “lagging behind” in offering the full range of pension options. Work and Pensions Secretary Iain Duncan Smith has also waded in, talking of providers “dragging their feet” and naming and shaming those that are seen to be “putting barriers up” to pensions access.

Not to be outdone, Labour peers have also joined the fray on the separate but related issue of drawdown charges, which have been dubbed “ridiculously high” and akin to the £20bn payment protection insurance misselling scandal. Lord McFall, the previous chair of the Treasury select committee, has gone so far as to claim savers are being ripped off “daily”.

What is conveniently not being mentioned amongst all this rousing rhetoric is providers are not compelled to offer the pension freedoms, nor do they have to invest significant sums in order to deliver the Government’s vision of pensions freedom and choice for all.

I agree that it is imperative for savers to be given the correct information when it comes to their options at retirement. This includes whether or not they need to take advice, and the providers that are getting this wrong need to cascade the right information to their staff, and fast.

But what is not acceptable is for the value of advice to be sullied as part of all this. Requirements to take advice have been put in place to protect consumers, not rip them off. Advisers also act as a welcome voice of reason against the clarion calls to treat your pension like your bank account, with no thought to the tax bill you may incur.

We would not want to be in a situation in 10 years’ time where the shrieking headlines are along the lines of “Why have savers been allowed to rot in retirement poverty?”

Natalie Holt is editor of Money Marketing



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There are 4 comments at the moment, we would love to hear your opinion too.

  1. I can’t comment on the Press as a whole, but as a Daily Telegraph reader I just cannot believe how irresponsible – and even stupid – they are.

    “Victory for Telegraph campaign” What are they campaigning for? To allow 55 year olds to access and trash the cash – not only from DC but from DB as well!

    So what do these genius journalists think these people will have to live on when they get to (say) 75. Anyway do they think they are in Greece – who in their right mind retires at 55? If they need the cash then have they heard of savings?

    It seems that the press together with our government is keen to see people just spend without any thought for the future. I can understand the government – they just want to accelerate the tax take, but what of the journalists – are they just courting popularity or are they just plain stupid?

  2. The financial services sector is an easy target for both political point scoring and “Look at them, making YOUR life worse” headlines from the tabloid press.

    I am sick to death of politicians saying something that they know to be inaccurate, at best, or an outright lie, at worst. Having said that some of the tabloid press get away with printing what ever they want with no recourse from anyone who’s lives/reputations they ruin. Just look at the drivel the Daily Mail prints on a daily basis.

  3. If we are going to apportion blame I believe a big, big chunk of it should rest with the Government. They pretend they trust pension pot owners to make good decisions about their own money when they clearly do not.

    The guidance guarantee via Pension Wise and the “second line of defence” risk warnings evidences this lack of trust. What should have been a quite simple change to the choices and options of the pension pot owner has become a complex mess. This it seems is always the way when Politicians come up with the next clever idea.

    The solution though is simple. Mandate that anyone with a pension pot can take as much or as little from said pot without guidance or advice or risk warnings. Then confirm that if they do that and run out of money later on there will be no comeback on the provider.

    Or just maybe they don’t trust people as much as they say they do?

    • Well I’m glad I’m not alone. I agree with you entirely. I would however add a rider. Once you run out of money and apply for benefits – these benefits will be reduced pro rata the original income you would have received via an annuity at the time. If that equates to zero or minus – the so be it. The person will then have to liquidate whatever other assets he/she may have – or just go back to work. B&Q are hiring.

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