In a Budget about the country ‘paying its way’, pension savers need to ensure they can continue to pay their way once in retirement. It’s all very well ‘trusting’ diligent savers to know what to do with their own money, but there is always a bit of a frenzy surrounding a point in time when chunks of money are freed up. I am referring to reforms announced this week to extend pension access to annuity-holders, in the UK.
Whilst it is great news that annuity-holders, who felt they had lost out because they were not included in the first round of pension reforms, can now partake in the freeing up of pension-provision regulation, my concern is that annuity, or pension holders, may not get the appropriate advice they need to make some of these decisions. So it is great for those who were forced into buying a poor-value annuity, because they may be able to do something about it in the near future.
It is concerning though, that the move to free up pension pots, does not appear to be matched by a commensurate provision of appropriate financial advice There is a danger of oversimplification, in a world that can rest on a myriad of complexities. Pension and annuity calculations seem to be based on a lot of variables, taking into account health and life expectancy, among other things, which might get lost in the cash-rush. And of course there will still be the cost-of-exit which needs to be taken into account.
It is also a sad indictment, but we are likely to see a rise of the get-rich-quick brigade entering the property market, to wax lyrical about the advantages of investing in property, as an alternative way to invest liberated pension pots. Whilst there are many upsides, given owners can earn more through capital growth than wages, in some instances, this will not be for everyone. Individuals should consider this in the context of their personal situation, assets and risk profile. They should seek grounded, common-sense advice from suitably qualified financial advisors and well-established, reputable estate agents.
I do hope this does not end up being the start of another mis-selling scandal or financial fiasco. Pensioners, don’t let the new freedoms eclipse your judgement.
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