Osborne has pledged £20m of government money to work with consumer groups to ensure access to at-retirement advice for all.
This requirement will take effect from April 2015. To deliver this, the government will introduce a new duty on pension providers and trust- based pension schemes to offer this guidance guarantee. The government will make available up to £20m over the next 2 years to develop this initiative. The government has also issued a consultation on how to implement the changes.
Osborne said: “we’re going to introduce a new guarantee, enforced by law, that everyone who retires on these defined contribution pensions will be offered free, impartial, face-to-face advice on how to get the most from the choices they will now have.
Those who still want the certainty of an annuity, as many will, will be able to shop around for the best deal. I am providing £20 million over the next two years to work with consumer groups and industry to develop this new right to advice.”
Pension campaigner Ros Altmann says: “Nobody needs to buy an annuity and before you do, you’ll have to get face to face advice. All DC pensions look set to be freed from the annuity straitjacket that has so disadvantaged people in the past. As the Bank of England’s policies have brought long-term rates so low, annuity rates have plunged and people get very poor value from the annuity market. The FCA recently exposed just how badly some annuity companies are treating customers and I have been campaigning for the changes that have been announced today for years. The Chancellor now says before buying an annuity people will be entitled to face-to-face impartial advice. That will be consulted on, but is so important. I don’t know if they are frightened of a new mis-selling scandal, like I’ve been warning, but whatever the reason it’s essential that people understand what they are doing before buying an irreversible annuity.”
Buck Consultants head of pensions policy Kevin LeGrand says: “It is important to remember that for many the security of a purchased annuity will still be worth paying for. This is where good advice will be essential, and there are proposals to introduce a new source for that; this is good news, but there must be clarity over which advice route the member should take.”
