Regulated advice can prevent huge mistakes at retirement

11th February 2015

The brand behind the Guidance Guarantee – the new pensions guidance service has been unveiled as ‘Pension Wise’. It will offer free and impartial information and guidance to people aged 55 and over with a defined contribution (DC) pension,  in order for them to make the most of the new pension freedoms coming into force from April this year. Pension Wise will be delivered by the Citizens Advice Bureau and The Pensions Advisory Service.

Furthermore, the Financial Conduct Authority (FCA) has also announced plans to introduce additional protection for those accessing their DC pension pot from 6 April. The FCA said providers will ‘be required to ask consumers about key aspects of the circumstances that relate to the decision they are making about their pension pot’. It continues, ‘Providers will be required to give relevant risk warnings, such as warning of the tax implications of their decisions, in response to answers from consumers. Firms must also further highlight the availability of the Government’s new Pension Wise scheme or regulated advice’.

Jonathan Watts-Lay, Director of WEALTH at work – leading providers of financial education and advice in the workplace comments, “I welcome the fact that pension providers now have to highlight the need for guidance or advice – whether that is through Pension Wise or regulated advice.”

He adds, “Although it’s great news that more people will be able to access pension information and guidance through Pension Wise, it can’t tell you what is right for you and if you go ahead with your retirement plans without receiving regulated advice, then you won’t get the same level of consumer protection”.

Watts-Lay continues, “It is more important than ever that those approaching retirement understand their options and how they can maximise their income during retirement.  I believe the best way to do this is through the provision of financial education followed by advice. We have provided financial education to over 70,000 employees and have found that this helps them to understand the advantages and disadvantages of various retirement income options.

Of course employees then need to know what is right for them personally, as many do not understand what their financial situation may be when they retire and are at risk of over estimating their likely retirement income. This is where regulated advice can help.

Getting regulated advice from an early stage rather than going it alone can help employees make the right choices at retirement and can prevent costly mistakes being made.”

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Further coverage can be found in Personnel Today.