The nation’s over-55-year-olds will enjoy “freedom and choice” from April 6th, when they will be able to access their retirement savings in “new and exciting” ways. It is estimated that over 4 million people will become eligible on that date alone.
Yet Steve Webb, Pensions Minister and mastermind behind all this, says people should be told to “stay in bed. There is no rush. Come back in the Autumn and sort it out”.
Maybe it’s because he’s concerned about people rushing and making the wrong decisions with their money, and maybe not being able to ask anyone for help?
You may have seen the adverts during Coronation Street, advertising the Government’s new website service PensionWise? Here you will be given guidance on what you should be considering. The focus is on six steps savers should take in deciding how to turn their pension pot into INCOME? These are:
1. Check the value of their pot
2. Understand the options they have now
3. Plan how long the money needs to last
4. Work out how much money they need in retirement
5. Ask what the tax implications are
6. Shop around for the best deals.
So if it’s that easy, why all the worry? What’s all the fuss about? 4 million people looking for answers on the web - could be another Kim Kardashian moment!
In addition “guidance” is available through Citizens Advice or the Pensions Advisory Service but to get advice you will need to see an IFA.
Understandably, the Government is concerned that a number of consumers will not bother to follow the steps or look for guidance or advice, particularly if there is a delay or queue to get through to the guidance process, which you can bet your bottom dollar there will be! So emergency “protocols” are being rushed into place that will see the pension companies and firms being required to spell out in simple language the potential and real risks, and tax pitfalls that may be involved in using “freedom and choice” to take money out of their pension plans. Will this work? Time will tell.
If you do want advice on these very important decisions...