Osborne signals free pension advice
Millions of people will get free, impartial advice on how to make the most of their retirement savings under George Osborne's radical shake-up of the pension system.
The announcement follows a consultation on the reforms set out in the Budget, which increased the flexibility for people to access their pension pots.
The guidance will be delivered by a range of independent organisations, including The Pensions Advisory Service (TPAS) and the Money Advice Service (MAS) and follows concerns consumers would not trust information given by organisations with a vested interest in selling a financial product or service.
Chancellor George Osborne said: " It's right to support hard-working people that have taken the long-term decision to save for their future, and I'm pleased that the responses we had to our proposals on making pensions more flexible have been overwhelmingly positive.
"We're making sure that people have the right support to make their own choice about how best to finance their retirement and I'm pleased to confirm that everyone with defined contribution pension savings reaching pension age will get free and impartial guidance on their range of available choices at retirement."
In total, 18 million people will be able to benefit from the changes to pensions should they wish to do so, the Treasury said.
From April next year, 300,000 individuals a year with defined contribution pension savings will be able to access them as they wish when they turn 55, subject to their marginal rate of tax.
The Government's response to the consultation, published today, confirmed that the Government will continue to allow individuals to transfer from private sector defined benefit schemes to defined contribution pension schemes, subject to two new safeguards - a requirement to take advice before transferring and new guidance for trustees.
Pensions expert Ros Altmann, the Government's older workers' business champion, said: " The decision that guidance must be impartial and separate from the industry is a real game-changer and will help equip people to make the right decisions for them.
"The challenge is now firmly with the industry to develop the products that people need, rather than simply the products they wish to sell."
Caroline Rookes, chief executive of MAS said: " The Money Advice Service welcomes the Treasury's announcement that we will have a role in the provision of the retirement guidance guarantee.
"We have already been working closely with the Treasury, TPAS and others to provide our knowledge and experience in this area, and will continue to do so in the months ahead."
"We are pleased to have this opportunity to build on our existing work helping people as they approach retirement and with wider money issues.
"Planning for retirement is a crucial life stage, and it is important that people feel well-informed and confident in the decisions they make."
Consumer watchdog Which? welcomed the separation of pensions guidance from sales.
Executive director Richard Lloyd said: "It's essential that people facing retirement get personalised, impartial support to navigate some of the most radical changes to the pensions market in decades, so it is absolutely right to separate this from sales processes.
"This decision will help avoid potential conflicts of interest when guidance is given, and will mean consumers are more likely to trust the information they get and make the right decisions.
"It's now for the regulator to establish the highest possible standards for both the pensions industry and those who will provide the guidance, so that people get better value for money out of their hard-earned pensions savings."