Savers face delays accessing their pensions cash

Emma Woollacott
A2CWRN Royalty free photograph of pension business headline in UK financial times pension; retirement; old; age; pensioner; prop
A2CWRN Royalty free photograph of pension business headline in UK financial times pension; retirement; old; age; pensioner; prop

The government has failed to make sure the right processes are in place for the pension reforms due to come into force in April, the Association of British Insurers (ABI) has warned.

In just six weeks' time, the over-55s will be able to access their pension pots at will - and more than 200,000 people are expected to do so.

But, according to the ABI, the pensions industry hasn't been given enough information to prepare for the changes, and pensioners may experience major delays.

"We want the reforms to succeed and for customers, to have a meaningful set of choices when it comes to decisions about their retirement incomes," says ABI director general Huw Evans.

"No 'ifs', no 'buts' we want these reforms to work. However, it is impossible to stand here six weeks before 6 April and say the Government is ready – that is a statement of fact, not an attribution of blame."

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The government has set up an organisation, Pension Wise, to help guide pensioners through their options. But, glaringly, Pension Wise doesn't yet have a phone number, so there's nowhere for pension providers to direct people to if they don't have internet access.

Nor, says the ABI, does it yet know how Pension Wise guidance sessions will work, how they will be structured and how the session will be recorded so that providers and advisers can know what customers have discussed and what was covered.

Neither are there any figures on the number of people expected to use the service.

There are also a number of blank areas when it comes to regulation. The tax rules on annuity payments to beneficiaries haven't been finalised, and there's no information on how lump sum payments by trust-based schemes will be regulated.

And the ABI says it is also still waiting for crucial rules about how providers need to interact with customers, especially those who refuse to take up Pension Wise guidance.

Calculate your pension income options

Evans stesses that he doesn't want to play a blame game - particularly likely with an election looming - but wants the government to make it clear to pensioners that the system may not work entirely smoothly at first.

"The government has simply not been able to deliver enough at this stage to ensure the reforms have a flying start when they go live. Critical pieces of the jigsaw are still missing and will not be in place in time," he says.

"I would like all of us who are engaged in trying to deliver successful reform to commit to a 'best endeavours beginning' for early April where we recognise the inevitable challenges of a new system going live in a spirit of openness, constructive comment and determination to gain momentum as we all get used to how the new world is going to work."

And it's worth remembering, says Evans, that April 6 is simply the start of the new pension freedoms.

"People should not be rushed into making quick decisions about pension savings they may have accumulated over thirty years," he warns.

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