The government's cunning plan to help more people get advice on what to do with their pension savings has one terrifying flaw: it leaves those with final salary pensions out in the cold - and at the mercy of scammers.
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The plan was unveiled by George Osborne, who announced at the dispatch box that pension savers would be able to take an extra tax free lump sum from their pension in order to pay for advice. Osborne may have been banished to the backbenches, but the plan continues to make its way through the machine of government, and the results of a consultation have been published.
The government is proposing allowing anyone in a defined contribution pension to withdraw an extra £1,500 tax-free in order to pay for advice (withdrawn as up to £500, up to three times during your working life). It will be known as the Pension Advice Allowance.
While it has been broadly welcomed, there are some experts who highlight that it leaves those in final salary schemes to fend for themselves. Jon Hatchett, Head of Corporate Consulting at Hymans Robertson, highlighted that it raises the risk that unadvised defined benefit pensioners may swap their guaranteed payout for a lump sum - without full appreciating the costs of that decision.
He warns: "DB savers are at risk of making poor decisions, particularly given the attractive rates being offered for a transfer as a result of low yields.... Once you transfer out, you can't transfer back. And the numbers taking a transfer doubled in the year following the introduction of Freedom and Choice."
"It's important that people get access to good quality advice from advisers who are qualified to offer pension transfer advice, to make sure they make the right decision – whether that's staying in the scheme or transferring out. Clearly that comes with a price tag. If this policy had extended to DB savers that could have helped ensure more people received better advice."
In addition, there's the risk that without advice, those in final salary schemes could fall prey to scammers. There has been a spike in the number of cold calling scammers targeting these pensioners in particular.
While those with final salary schemes may not have the ready pot of cash they can be conned into parting with them, they can be exploited by scammers offering transfers, which they claim will provide impossibly good returns with the benefit of a larger tax-free lump sum. Once they have transferred into these scam funds, they may never see the money again