Pension savers across the country are being warned not to have false expectations of new pension freedoms when they arrive along with the new tax year in April. This forewarning has been issued by The Pensions Advisory Service at a time when more and more pension providers are advertising their product plans for the next financial year.
The FCA have devised a list of personalised risk warnings that pension providers must give customers after April 2015. As well as this, savers over the age of 55 will be given more flexibility to acquire defined contribution savings as cash without the need to buy an annuity.
Nevertheless, pension savers are being warned not to expect the same ease of access to their funds as they are used to with a typical bank account. This is where details begin to get a little complicated.
What does it mean for Consumers?
Perhaps the most surprising element of the reform in April is that people will probably have to take some advice, exit one product, and then possibly take out another product in order to access their cash.
Many pension providers are adapting now to the rule changes, with Suffolk Life announcing that it will offer a full range of pension income possibilities. Old Mutual Wealth has also announced that it will launch a new flexible drawdown facility that will allow consumers to make monthly income payments and take ad-hoc withdrawals from uncrystallised funds at times to suit
Nevertheless, both companies have admitted that payment requests will not be processed instantaneously. Old Mutual Wealth has stated that ad hoc withdrawals can take up to eight days to process – this will be the standard period of time across the industry.
Help is at Hand
The Government has estimated that approximately 320,000 pension savers will take advantage of the relaxation of rules every year. In order to help people understand the reform and what it means for them, they have launched the Pension Wise website – aimed at 55 year olds and over. Here you can find details of the new retirement income options on an easy to use six-step guide.
Greater pension freedoms have meant that many Brits approaching retirement are considering their financial options and the potential for investment in more detail, and are exploring options that were not previously possible. Peer-to-Peer lending is an alternative to more traditional routes of saving, they are not covered by the Financial Services Compensation Scheme and therefore, do pose a risk factor.
Wellesley & Co. is a Peer-to-Peer lender that specialises in asset backed lending. The firm is regulated by the Financial Conduct Authority and offers investment terms from 30 days to 5 years with rates of returns reaching up to 6%. To talk about your investment options, please call Wellesley’s Customer Care Team on 0800 888 6001, alternatively send an email to [email protected] .