Are The Pension Reforms Doomed to Fail?
The effects of George Osborne’s new ‘pension freedoms’ are just beginning to surface. People seem to be mainly in two (very different) camps about them. The first group sees them as irresponsible and dangerous. The second thinks they’re having a positive impact on savers’ quality of life. So is what is really happening with the pension revolution, and are claims about the reforms’ supposed damage being exaggerated?
A golden dawn for savers?
Chancellor George Osborne announced the new plans for savers back in Budget 2014, discussing them more broadly in the Spring 2015 Budget.
The main idea was to allow savers over 55 years old to withdraw as much as they like from their defined contributions (DC) pensions, at any time they like. This would ensure that nobody would need to turn their pension into an income for life using an annuity.
However, while full pension freedom was promised by Osborne, some reports claim that pension firms are not handing over their savings. One example quoted has been the insurance giant Phoenix, which has over 2.2 million policies.
Similarly, some providers are so nervous to sell to their customers under the new guidelines that they are taking out their own financial advisors. This can be an expensive service, and is completely avoidable, given that the customer asserts their rights.
Our Hertford financial advisors are experienced in handling these sorts of causes from our clients, so if you do have any issues of these kinds, we can help you to move forward and unlock your pension. This is important because some people have reported that their financial advisors are ignoring their requests for help.
While some pensions firms are making their clients feel like criminals, it’s important to remember that all requests to drawdown money by a saver over 55 from their DC pension are legitimate, and must be adhered to. If your requests are being ignored, speak to one of our experienced Hertfordshire financial advisors.
Of course, with the changes so significant and so quickly implemented, there is bound to be some shaky ground while savers and pension providers figure everything out.
A Conservative success?
According to George Osborne, the new policies have been a success. New figures suggest that 60,000 people have accessed their savings early. Firstly, this means that the above cases are not as common as some would lead you to believe. Second, they suggest that the policy has been broadly adopted.
The total amount of early drawdowns has already exceeded £1bn. While this can be seen as a sign of success, Osborne has told the House of Commons ‘we have to make sure that people get the best advice, that the market responds, and that companies up their game in helping customers make use of these freedoms.’
Our Hertfordshire financial advisors would suggest that anybody interested in the prospect of withdrawing their savings early should consult a professional. It’s vital that those drawing down are doing so to safeguard their futures, and are not compromising them.
We can help you make smart decisions about the investment potential of your DC pension, so if you are considering withdrawal, speak to us today.