The pensions schemes Act 2015 is set to be amended to make sure provisions treat the value of safeguarded benefits, including the guaranteed annuity rates (GAR), as equal to the actual payment (Independent Pension Advice Bristol).
A statement from the Department for Work & Pensions published last week outlined its response to the call for evidence on the valuation of pensions with GAR for the purposes of the advice safeguard.
The intention is that the regulatory changes will be laid before Parliament later this month and come into force 6 April.
Gareth Evans, head of corporate affairs at Royal London said the change to the GAR valuation process to make the £30,000 advice threshold equal to the transfer payment was welcomed as this would make it easier for consumers to understand when independent financial advice is required.
However, he said an opportunity has been lost to help those customers with smaller pension pots with GAR benefits, who would still be required to get financial advice.
Mr Evans said: “The requirement for customers with GARs benefits to receive may provide and the strengthening of the risk warnings will help to improve the value of the benefits they have.
“But they will still face the frustration and difficulties that many customers experience in obtaining the necessary advice before they can access their savings.”
Royal London previously called for those customers with smaller pension pots, for example £20,000 to £40,000, to have a conversation with Pension Wise before being allowed to transfer or flexibly access these benefits.
Mr Evans said: “ We believe this would help to address the concerns around the perceived high cost of advice in relation to the size of the customers pension pot”.
“Hopefully we will see changes announced soon in response to the Financial Advice Market Review that will provide wider solutions for more consumers to have cost-effective access to impartial advice”.
The amended valuation approach will apply to both personal and occupational pension schemes, in respect of all types of safeguarded benefits.
The Government plans to amend regulations so that ceding schemes are required to send a personalised risk warning to members considering transferring or surrendering their GAR benefits, with further consultation ahead of changes this summer.
The Government agreed it was crucial that steps were made to ensure members understood and appreciated the benefits conferred by a GAR before making a decision to surrender these benefits.
Independent Pension Advice Bristol
If you would like to speak with one of our Independent Financial Advisors and potentially receive financial advice, please contact us on 0117 923 7652. We are based in Clifton, Bristol but we are happy to service clients from across the UK and we provide free initial meetings at our client’s convenience.
Churchill Wealth Management Limited is located at 13 Alma Vale Rd, Bristol BS8 2HL, United Kingdom.
About Us: Churchill Wealth Management is a team of independent financial advisors/financial advisers (IFAs) based in Clifton, Bristol. We provide independent financial advice, including pension advice, investment advice, inheritance tax planning and protection/insurance advice.