Since a vote hungry Chancellor George Osborne declared changes to how pensions can be taken after April 6th 2015, there are some who believe enthusiasm for pensions has increased. At a stretch, and I do mean a stretch, it might even be said pensions have become interesting. Funny thing is, as with most politicians, What the Chancellor says, and what he does, are very different. The big quote from the budget speech was that every person over age 55 with a pension pot would receive free impartial independent advice. Well, he lied, or to be kinder, he mis-spoke, but not of course to boost political capital.
What was written down, but not spoken was all would be able to access free impartial independent guidance, but let’s be honest, few outside the heady world of financial regulation know there is a significant difference between the two. Clearly the chancellor doesn’t, so why should you?
Authorised and regulated ‘advice’ means a person, i.e. a human being, qualified, authorised, regulated, and approved by the Financial Conduct Authority. It helps if they are not in gaol / jail (delete as you wish), speak your language, and have arrangements in place to compensate you if it goes wrong. Ideally, they should also be pleasant and polite fellows, of any gender, with the ability to put in writing, free of gobbledegook, what you should do, what you should not do, what you could have done and why you shouldn’t do it.
‘Guidance’ means a person, or a booklet, or a online interface or ‘app’ to use the modern parlance who will read to you out loud what your pension provider will already have written down for you to read, and then leave you to it. If reading is difficult for you, then this is a valuable service.
In a similar vein to “if you need to ask the price you cannot afford it”, then if you think you need guidance, realistically you probably need advice. Problem is, advice costs money, but guidance resulting in the wrong decision will likely be far more costly. Difference is, you will only have yourself to blame.
Remember, free advice is usually worth what you paid for it, so how does one go about getting ‘guidance’?
The chancellor wants to be seen to be in league with a certain voting demographic against the nasty mean financial services companies so it is not surprising one source is set up by the government, but funded not least by nasty mean financial services companies. Called Pension Wise, it will be available online, over the phone or face-to-face at a local Citizens Advice Bureau. This assumes of course your local Citizens Advice Bureau has not been shut down because of a lack of government funding. The decision you make is still on your own head/wallet.
The second source is also set up by the government, but funded entirely by nasty mean financial services companies. ‘Money Advice Service’ is not an advice service, but an
information and sometimes ‘guidance’ service set up by Government but entirely funded by a mandatory levy on financial advisers and financial services companies. You see, even the regulator gets confused; because I offer advice, I have to be approved, authorised, qualified, regulated, tipped upside down regularly and inspected, but the ‘Money Advice Service’… No. The decision you make is still on your own head/wallet.
A third source is the providers of your pension. If you call and ask to access, draw from or take an annuity from your pension savings, they will be required to question you, and point out the possible failings in the course of action you choose. The decision you make is still on your own head/wallet.
Finally, there is advice, but in the wake of the above, a certain definition does not fall readily to my keyboard. I would not say all paid for advice is worth it, I mean look at how the government was advised on the Royal Mail giveaway, sorry, I mean sell off, and they certainly paid for that twice over.
I suppose all I can say is as you would with any other high value decision. Ask around, shop around maybe, and be certain you understand what you are paying, and what you are getting in return.
Bye for now.
Disclaimer: ‘Neston & Beyond’ and similar articles written by me are my personal views and the sole aim is to where possible inform, sometimes amuse, occasionally entertain and hopefully, if all else fails, at least be interesting. In no way can any of what you read here be taken as advice of any form, be it desirable, ichthyological, astronomical, factual, governmental, statistical, financial, legal, marital, occupational, political, philatelogical, sociological, incidental, accidental, fiscal, zoological physical, biological, medical, dental, accidental, haberdasherial, cosmological, or tangential.