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Robert Reid: Budget provides best advert for professional advice

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Everyone told us that the time for face to face advice was limited (I hesitate to use the word restricted) but now the Chancellor is providing £20m towards advice at retirement.

Advice was the term used in the speech but the detailed papers talk of guidance. I assume like the term information, it remains different from advice. I just hope that MAS is kept away from it!

We need a system where those advising on retirement are unbiased, despite the fact that it is the providers and trustees of the DC plans picking up the tab. Just how this leaves the smaller trust-based DC providers is not clear but the days of tied annuity deals have clearly reached the end of the road.

The introduction of possible relief for contributions post-75 may seem on the fringe but it highlights the issue of longevity in terms of funding as well as for decumulation.

This freeing up of pension funds does no favours to the online annuity sellers or providers and delivers the best opportunity for financial planners.

This “pensions amnesty” will provoke discussion and no doubt have many people deferring annuity purchase till this new regime takes hold.

There is no doubt that investment risk or buying poor value annuities has now firmly moved to a longevity risk – people will need more help in ensuring they don’t outlive their money.

The Government clearly trusts those who do access their funds early will think long-term and not just shop till they drop, then fall back on the state.

As with all things post-RDR, costs will be absolutely under the microscope in future and with retirement bonds from NS&I providing 4 per cent advisers need to sharpen their pencils especially those on 1 per cent level charging.

If planners can get their charges right and use IT to its full potential, then this Budget is the best advert for planning I can recall for a long time.

Robert Reid is managing director of Syndaxi Chartered Financial Planners

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  1. Pension changes look very interesting post 2015 and I can see a move to withdrawing monies from a fund over a period of years up to max of basic rate tax each year and putting in to an NISA or some in to Purchased Life annuities or perhaps even a new variant.

    There is still an argument for mortality cross subsidy by using an annuity. Of course bonds with underwritten secure lifetime income rather than PLAs have become a more palatable option in recent years and it could be we see new products which combine this with a Long Term Care risk premium deduction against failure of activities of daily living appearing too.

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