The 2014 Budget champions financial education

29th April 2014

Jonathan Watts-Lay, Director, WEALTH at work comments on Pay & Benefits about the recent Budget announcements.

Watts-Lay comments “The 2014 Budget has championed providing financial education to staff before pensions are accessed at the point of retirement

This year’s Budget proposes some of the most dramatic changes in the pensions and savings arenas for years.

From April 2015, tax rules will change to allow people to access their defined contribution (DC) pension savings as they wish from the point of retirement. This means that an individual will be able to withdraw their pension savings at a time of their choosing. This applies once they are over 55, subject to their marginal rate of Income Tax, without having to secure any level of pension income.

To coincide with this change and support people accessing their DC pension savings, it was announced that they must be offered free and impartial face-to-face guidance on their choices at retirement. This will be called the “guidance guarantee” and is a new duty to be placed on pension providers and trust-based pension schemes.

These are the most welcome Budget changes we have seen in years. They bring freedom and flexibility to pension savers and remove the need to have a specific amount of secured pension to be able to access all options. At the same time it makes it essential for individuals to take advice to ensure that they make the choices that are in their best interests.

The foundation of our service is the provision of high-quality, face-to-face financial education that covers all the retirement income options available to employees. Many corporates recognise the need for this important service and this is further supported by strong empirical evidence from those employees who have benefited from guidance.”

Please see Pay & Benefits to learn more.