Savers are to receive free independent advice when given unfettered access to their pension pots from next year, the government has said.
The plan changes an aspect of the major liberalisation of defined contribution pensions unveiled in the Budget.
Critics had raised concerns a proposal to make providers give advice could see unsuitable investments recommended.
The guidance will now be through independent organisations, paid for by a levy on regulated financial firms.
It will it not always be face-to-face, as first indicated, but could be provided online or by phone.
Up until now most people in defined contribution schemes - where the final pension depends on the amount of investment returns - bought an annuity, a pre-set income for life, from a provider when they retired.
But from next April, savers will be able to use their pension money as they see fit, from the age of 55.
'Vested interest'The Treasury carried out a consultation after the Budget in March and is now publishing the final rules for the changes.
It said the plans were "overwhelmingly well received", with savers backing greater freedom and choice, and the pensions and insurance industry ready to create new products better suiting individuals' needs.
But the Chancellor George Osborne had acknowledged from the start that advice given to savers through the providers themselves might not be seen as impartial.
The guidance will now be delivered by organisations including the Pensions Advisory Service and the Money Advice Service.
The Treasury said: "The government wants to ensure that guidance is trusted by consumers, and the vast majority, including most of the financial services industry who responded, said that consumers would not trust guidance given by a person or organisation with a vested interest in selling a financial product or service."
The Treasury said about 300,000 people with defined contribution pension savings will be able to access them as they wish next April, although only the first 25% of money taken out of their schemes will be tax-free.
It also confirmed that the government will allow new pensioners in private sector defined benefit schemes to transfer into defined contribution pension schemes. But it decided to introduce two new safeguards - a requirement to take advice and new guidance for trustees of the existing schemes.
The pension reform plans, however, have led to some financial analysts questioning how the insurance industry will be affected by a potential fall in demand for annuities.
Independent advice for new pensioners
Put the internet to work for you.
0 comments:
Post a Comment