10th June 2015
The government is not going to immediately force providers to make-good on the promised pension freedoms, the pensions minister Ros Altmann has told the BBC.
The revelation comes on the back of reports that some pension companies are not yet allowing over-55s to get at their cash, as the new rules allow, while some firms are charging punitive fees for withdrawals.
Speaking to BBC Radio 5 Live Altmann, said the reforms, which went live in April, must be given more time to work.
She said: “If things aren’t working properly, we will take action. But let’s give these reforms a chance; let’s see how they work; the idea is right.”
Under the new rules, savers aged 55 and over are allowed full access to their nest-egg and do with it as they see fit – people no longer have to buy an annuity. But the industry has complained that the legislation was brought in too rapidly.
However it has emerged that some firms are refusing to offer the full range of freedoms.
Tom McPhail, head of pensions research at Hargreaves Lansdown said: “Given the speed with which the reforms were introduced, it was always likely that some companies would struggle to be ready in time. Investors with these companies should be given the freedom to transfer their money elsewhere without having unnecessary barriers put in their way.
“Insisting that investors pay hefty exit penalties, use a financial adviser that some may not need, or jump through bureaucratic hoops is simply not reasonable or fair.”
Ammo Kambo, chartered financial planner at wealth manager Brewin Dolphin, added: “It’s important that these reforms are implemented with care, but investors now have the right to access their money at their discretion. Savers need to see consistency in the implementation and be able to access the money they have saved hard for over their working lives.
“Unreasonable fees, lengthy delays and challenges in obtaining or affording advice need to be addressed quickly.”
McPhail asserted that firms which are unable to offer their customers the pension freedoms, should make sure they can at least leave and access the freedoms elsewhere with a company that can help them. “Transfer costs should be no more than a nominal administration fee and should be completed with a matter of a few days,” he added.
For those looking to access their pension pots in the near future, McPhail advised that they plan well ahead. He said: “If you are intending to access your retirement funds, contact your pension provider in plenty of time. There may be a lot of paperwork and delays involved; some companies may insist you speak to a financial adviser first.”