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Pension ‘credit card’ set to launch next year

A London-based firm is to offer a “pension credit card” next year for those wanting flexible access to their retirement savings, with at least one major insurer looking to do the same.

The Telegraph reports that WisePension plans to launch the product late next year, following major reforms taking effect in April which mean anyone aged 55 or over will be able to take their entire pension pot as cash. 

The card will work in high street shops, cash machines and online stores, allowing consumers to treat their pensions like ordinary bank accounts.

At the end of each month the card’s balance will be cleared using cash in the customer’s pension pot. There will be a spending cap so pensioners cannot fall into debt.

WisePension chief executive Jon White says: “Technically, we can’t limit how much of their pension people spend on their cards, but we will be doing a lot to encourage people to spend responsibly.”

Savers will track their purchases and balance using an online “dashboard”, he said, which will look “very much like online banking” and include tools to work out their tax liabilities.

Several pension companies said they would wait to see if the WisePension card proves popular before considering a similar service.

One FTSE 100 insurer admitted privately that a debit or credit card option “had been discussed”.

However, senior industry figures said they had hesitated over fears that a card could encourage savers to spend their pension pots too quickly.

Barnett Waddingham senior consultant Malcolm McLean warns the cards could lull savers into a false sense of security in thinking that their pension is exactly like a bank account.

He says: “Anything that makes getting money out of your pension simpler is potentially a very helpful thing. But people have to understand that a pension is not the same as a bank account, because with a pension you will be taxed on some of your withdrawals.”

Before they start using the cards, savers will be asked to decide whether they want to take their 25 per cent tax-free lump sum immediately, meaning that all their initial withdrawals would be tax-free, or whether they want to have tax relief applied on a pay-as-you-go basis, meaning 25 per cent of every withdrawal would be free of tax.

Once their account is up and running, they will be asked to reselect this option every year.


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There are 12 comments at the moment, we would love to hear your opinion too.

  1. I really don’t like the sound of this. It spells danger. Decision making on the hoof and in a retail environment is inappropriate. I can only see this going wrong on a major scale. Personally, I wouldn’t want my salary to be available in this way and as pension is “salary in retirement” neither should one’s pension. Flexibility is fine with responsible and informed choices being made but where is the prudence in pension credit cards?

  2. Here we go again….product first, people second….when will this industry wake up and start to put people and their heartfelt goals first?

  3. Well this is just plain stupid !!!

    I agree with people being able to access their pension savings with freedom ! but this ?

    Put aside the inherent dangers of a credit card for a moment, just think of the fraud ? scallywags all over the country will be rubbing their hands !

  4. If this was April 1st I could have happily ignored this article but a Pension Credit Card has to be one of the most appalling financial ideas ever. Having access to your pension is one thing if you have to transfer the funds to your bank account to spend them but to have access on tap will result in the Lamborghini scenario.

  5. Looks like a step to far! The temptation could be too great if there are no safeguards. Although I think that it is a logical step, as it is no different than paying the pension into a bank account and then paying the credit card off from the account. It just shortens the process and that is the danger, it makes it very easy to exhaust a pension pot quickly. In practice I am not sure why anybody would take it up. One more card, one more set of pin numbers to remember and one more thing to lose or have stolen. If I had the option I would just use a bank account and manage the money.

  6. Surely this should be described as a ‘debit’ card rather than a credit card? Possibly a semantic point, but correctly naming it in the first instance will help manage user expectations and understanding of what it actually is.

  7. Hopefully, the technology will be there to show the true cost of what you are buying, assuming of course that the TFC element isn’t inexhaustible. If you are buying something for a couple of grand the technology will need to take in to account your tax rate and tell you the true cost of the what you are spending…otherwise people will be in for a big shock.

    An idea which sounds great but is ridiculous and should be stomped on immediately!

  8. Good point Smithy!

  9. Different Point of View 17th November 2014 at 11:14 am

    If people want a pension credit card, why not get the best Credit Card on the market – e.g. cash back and then when the statement comes in take the withdrawal to clear the balance, that will be more transparent and cost effective.

    In addition nobody has mentioned the costs of selling, so if you maker a purchase when markets are down the effect on your fund will be worse or will you be force to hold cash?

    Thank the Conservative for another Pension Scandal!

  10. I don’t need to labour the point about why this is a stupid idea. Cash withdrawals should be taken from your current account (where it is free and if you draw too much you can just put it back), pension withdrawals should be considered carefully each time with regard to tax implications (and the market if you are withdrawing from funds). But all of us already know that.

    DH’s point about fraud is interesting. If someone clones my debit or credit card and withdraws all the money, I can claim it from my bank and they should put it back. What happens if someone clones your pension card and withdraws your entire pension? Can the bank put it back? Would putting it back be subject to the annual allowance, etc?

    A classic example of something that creates more problems than it solves.

    That said, I’d never heard of WisePension before this, so it has to go down as a PR coup. After reading their website I’m still not much the wiser.

  11. I don’t think that the Coalition can be blamed. More flexibility is very welcome, as is innovation but it has to be the right innovation for all parties concerned. The people to blame are the firms and providers who came up with this idea without first thinking about the individuals and the consequences before thinking about making a quick buck.

  12. Who is going to complete the raft of taxation paperwork each time a withdrawal is made?

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