One Month Countdown To Pensions Christmas
With a whole host of new pension reforms due this April 6th, we take a quick look ahead to next month’s big day.
One month tomorrow is set to be one of the biggest days in the history of pensions in the UK – granted, there are few other big days to compete with – so we take a quick look ahead at what it all means.
Basically, come April 6th, over 55s will be able to spend or save their pension pot as they see fit. Previously, any saver contributing to a DC scheme was forced to take out an annuity but that will no longer be compulsory. Now savers will be able to drawdown income, take out a lump sum, treat their pension pot as a bank account or they can still take an annuity if they like.
Will there be a rush?
Undoubtedly there will be a rush of people looking to take a lump sum on April 6th, although Pensions Minister Steve Webb warns against a midnight rush. Speaking at the recent Employee Benefits Connect 2015, Webb said: “April 6th is the start of something, it’s not a deadline. It’s not ‘shop now while stocks last’. The freedoms will still be there on April 7th and indeed on May 7th, and if someone is over 55 with a pot of money, why oh why oh why would they phone their pensions provider at midnight on April 6th?”
Webb added: “My strong advice to people is just take a bit of time. They should look at their options and get the information. There just is no rush.”
Savers have already been warned not to rush into any decision and have been recommended to seek financial advice by industry experts before making a decision on what to do with their life savings.
The government’s guidance guarantee is also being introduced and will be known as ‘Pension Wise’. This service will be free for all those coming up to retirement and will provide guidance either over the phone or face-to-face, provided by the Citizens Advice Bureau (CAB) or The Pensions Advisory Service (TPAS).
In many cases, savers will be advised to seek further advice since the Pension Wise guidance will only be able to outline the options and not recommend any individual option.
Predictions for the month ahead?
Nobody knows for certain how the month ahead will play out in the build up to the pension changes.
One thing that is certain, however, is that drama is to be expected...
Photo credit goes to Fanch The System