The National Association of Pension Funds (NAPF) today (Monday) commented on the Government’s latest response ‘Freedom and choice in pensions: government response to the consultation’.
As part of his Budget announcement in March, the Chancellor promised all defined contribution (DC) pension savers would have access to free guidance as part of the ‘freedom and choice’ reforms, but four months later there is still very little detail on how the ‘guidance guarantee’ will work.
Graham Vidler, Director of External Affairs, NAPF, said:
“Today’s announcement that the ‘guidance guarantee’ will be provided by independent organisations marks the very beginning of the work needed to make sure a guidance service is ready for savers.
“Up to 500,000 people will need guidance next year. Workplace pension schemes want to help their members make good decisions. To do that, they need to know how to adapt their own communications to signpost and complement the guaranteed service. They will also want to be confident that the new service is fully-tested and ready to deliver from day one. With less than 200 working days to go, the clock is ticking.”
“We are already working closely with both TPAS and MAS to share thinking on the shape of guidance. We continue to be committed to making a success of guidance and stand ready to help the Treasury project team announced today make the necessary progress at the necessary pace.”
The Treasury also outlined new proposals to limit the annual allowance to £10k per year for people who have withdrawn more than their tax free cash from a pension scheme, from age 55 years onwards. Graham Vidler, added:
“We’ll never know whether mass market recycling of pension savings would have become a problem in reality. The Government has decided to act now and we’re pleased that the Government has listened to us and chosen a solution that does not create a disproportionate burden of cost and administration.” The Government proposes to keep the option to transfer from defined benefit (DB) to defined contribution (DC) pension schemes. Graham Vidler, commented:
“Allowing the transfer from DB to DC schemes is in keeping with the ethos of ‘freedom and choice’. However, DB pensions are often highly valuable and anyone considering a transfer should think very carefully before making an irreversible decision. So the requirement for savers to take independent financial advice before making a transfer from a DB scheme is an important safeguard.”
Notes to editors:
The NAPF is the leading voice of workplace pensions in the UK. We speak for 1,300 pension schemes with some 16 million members and assets of around £900 billion. NAPF members also include over 400 businesses providing essential services to the pensions sector.
Lucy Grubb, Head of Media and PR, NAPF, 020 7601 1726 or 07713 073023, [email protected]
Eleanor Bennett, Press Officer, NAPF, 020 7601 1718 or 07825 171 446, [email protected]