Governments of differing stripes have, over the last 30 years, tried to simplify the path to an adequate retirement, and there is almost universally held agreement that in each case the changes implemented have simply served to complicate matters further.
Now we are faced (on April 6th 2015) with the Granddaddy of all changes. Happily titled ‘Pensions Freedom’ it offers us another glimpse into a simple and clear future as we prepare to bow out from the rat race.
Of course, in reality we are finding that these changes are neither simple nor clear. Faced with a public that will, for the first time in living memory, be given full access to their pension pots, we are gradually awakening to all manner of nightmarish possibilities – not least of which may be the overwhelming desire of some to get hold of whatever cash might be available and use it for whatever hare-brained reason they might currently be considering. This rather than using said funds as a replacement income in their retirement.
Yes, I know. We are adults and should be trusted to behave as such. It is our money and we should be free to spend it as we wish.
Of course. I can’t disagree.
However, in the constant search for civilising and responsible behaviours we do also acknowledge that our actions should sometimes be ‘restricted’ to protect both others and ourselves in our society.
Traffic lights might be a good case in point.
Using the ‘we are adults’ line of thinking we might agree that we should all be able to navigate a simple junction. However, we also know that there is always someone out there who will not be concentrating, or is in a hurry, or some other reason that will not stop them from slamming into the side of our vehicle. The traffic light doesn’t remove the risk entirely, but it most certainly reduces it dramatically.
I’ll come clean. This pensions freedom legislation is good policy. It will open up creative possibilities to many and the scrapping of the pensions death tax sees the end of a bad tax for the right reasons.
But where are the traffic lights?
Good quality advice has been promised to all and yet the government proposes that this advice will be dispensed by the Citizens Advice Bureau and the Pensions Advisory Service.
Anyone involved in the Pensions business (and we are heavily involved in this area) knows that our advice is given by highly qualified individuals with access to the most current thinking and sophisticated tools available. They understand what a minefield this topic is and spend a considerable amount of time and effort in making sure that our clients get extremely detailed and appropriate advice.
For this there is a cost.
I do not believe for one minute that the good people of either Citizens Advice or the Pensions Advisory Service will be able to provide even a tiny fraction of the required pensions advice needed and this is not only a shame, but gives us the real glimpse into the future of what the story of pensions freedom will actually be.