Government proposals for a 'second line of defence' for savers seem sensible given the breadth of the changes coming under the new pension freedom and death tax rules, although consumers and regulators alike need to be aware of the practical challenges involved, according to investment platform provider AJ Bell.
“Safeguards that help savers make the best decisions for them are always welcome, although pension platform providers will have very little time to prepare the necessary forms. Consumers need to think carefully before acting and already have the option of consulting the new Pension Wise service,” says Gareth James, Technical Resources Manager, AJ Bell. “There is an argument that the very requirement for two lines of defence indicates that the Government has gone too far, too fast with its pension reforms. We suspect that the majority who have decided to withdraw significant amounts from their pension are unlikely to be swayed by risk warnings coming from the provider of that pension.”
Notes for Editors
- AJ Bell has prepared a number of case studies and articles relating to specific issues raised by the pension and death tax rule changes. These are available on request.
- Since the Budget of March 2014, the Government has outlined a series of pension reforms which will come into force from 6 April 2015.
- Under the new rules, savers can leave their money in their pension or access the cash via a single lump sum, a series of smaller lump sums and/or by drawing a regular income.
- At the AJ Bell Investival, held in November 2014, 60% of the financial advisers who attended said they felt the new pension flexibility rules have gone too far, when asked to vote via an app created especially for the event.