Budget speeches rarely live long in the memory, but George Osborne’s 2014 Budget revolutionised retirement, giving savers greater access to their pension pot, whilst introducing a new concept: ‘guidance’.
In his speech Mr Osborne said that every person retiring would receive “advice” on their options. This was swiftly changed to ‘guidance’ to differentiation the concept from regulated financial advice. Nevertheless, a new source of information is now available in the guise of Pensions Wise, which opened its phone lines earlier this week.
Pensions Wise is run by the Pensions Regulator and Citizens Advice and is there to help guide people approaching retirement through their options.
We thought we would take a look at the new service and explain what it does, and perhaps more importantly, doesn’t do.
First things first, what does Pensions Wise do?
Pensions Wise will offer you guidance about the options available to you, according to its website it is: “A free and impartial government service that helps you understand your new pension options.”
However, “Pension Wise won’t recommend any products or tell you what to do with your money.”
Who is it available to?
At present the service is only available to anyone over the age of 55.
How do I contact Pensions Wise?
You can call on 030 0330 1001 to book your telephone or face to face appointment, which will take place at a Citizens Advice Bureau.
The appointments are free and lines are open 8 am to 10 pm, seven days a week.
Will it be easy to get an appointment?
The truth is no one really knows. Some industry experts believe that with hundreds of thousands of people retiring each year the service could quickly become overwhelmed. However, recent research by Scottish Widows found that only 53% of people over the age of 55 had actually heard of Pensions Wise.
Of those people who had heard of Pensions Wise only 20% were fully aware of how the new service worked.
What will happen during your appointment?
During your appointment with Pensions Wise you will discuss:
- The various ways you can take money from your pension pot
- The implications of each option for your circumstances
- The various next steps you could take
Pensions Wise suggest you prepare for your appointment by:
- Getting the value of your pension pots from either your provider(s) or paper work previously sent to you
- Having an estimate of the State Pension you are likely to receive, which can be obtained by calling 0845 600 4274
- Having information about any special arrangements attached to your pension fund, such as Guaranteed Annuity Rates (GARs) to hand
You should also have a think about your financial circumstances, including the amount of income you need, your likely expenditure in retirement, any debts you might have and when you want to retire.
Is it the same as traditional financial advice?
No, it is very different and does not replace financial advice.
Pensions Wise will not recommend products, companies or specific investments; only a regulated financial adviser can do that for you. Furthermore, Pensions Wise does not provide an ongoing service, which many advisers do.
The best way to compare the two is to think of guidance as providing high level information after finding out a little about your circumstances, whilst advice is a full recommendation, only made after a comprehensive fact finding process, which will include a recommendation as to which product, provider or investment is most suitable for your needs.
Indeed many people believe that once guidance has been given by Pensions Wise, a referral to a financial adviser will be necessary so that specific advice and technical assistance can be given.
Clearly financial advice comes at a cost, with advisers charging in different ways for their time and the services offered.
Confused about the pension changes? We’re here to help
The changes to pensions, which will take effect from 6th April are potentially extremely complex.
We welcome the introduction of Pensions Wise and believe it will help pensioners make better decisions, but it’s clear that it does not replace high quality, independent, financial advice.
If you want fully regulated advice, tailored to your circumstances, we are here to help.
Contact us today on 0115 933 8433 or email email@example.com