Warning as change in pension rules loom

CRUCIAL details of exactly how the Government’s retirement savings revolution is set to work are still missing with less than six weeks to go before people are handed new freedoms over their pension pots, insurers are warning.

The Association of British Insurers (ABI) has cast fresh doubts over how prepared the Government, regulators, pension providers and advisers are for the changes, which will mean that people aged 55 and over can take their pension pot how they like, rather than being herded towards buying a retirement annuity.

From April 6, the 320,000 people who retire each year with a defined contribution (DC) will be able to take it as they choose, subject to their marginal rate of income tax in that year.

But the ABI’s director general Huw Evans will warn today that it is “impossible to stand here six weeks before 6 April and say the Government is ready”.

He will predict that “critical pieces of the jigsaw” will not be in place in time when the reforms go live.

Free, impartial guidance is being offered to people looking to decide what to do with their pension pots, under the branding “pension wise”. The guidance is being delivered by Citizens Advice and the Pensions Advisory Service.

The Government has said that the pension-wise service will be available online, over the phone or face-to-face. Some people may also decide to pay for independent financial advice.

But the ABI said that with pension providers already sending information to people who are retiring in April, there is still no pension-wise phone number for providers to direct people to.