25th February 2015
With just six weeks to go until new retirement freedoms come into force, crucial details are not yet in place, such as a phone number for the free Pensions Wise guidance service, the Association of British Insurers will warn today.
New ABI director general Huw Evans will say, in a speech later today, that despite unequivocal support for the pension reforms launching in April, he has real concerns about the preparedness of the Government, regulators, providers and advisers.
Evans will raise outstanding issues which the pensions industry has repeatedly sought clarity on. For example, Pension Wise, the free guidance service, has no phone number yet so there is nowhere for pension providers to direct people to if they do not have internet access. Evans says we still don’t know how the Pension Wise guidance sessions will work, how they will be structured and how the session will be recorded so providers and advisers can know what customers have discussed and what was covered. There has been no official modelling on expected numbers to use the service and estimated waiting times which can be shared with customers.
The final tax rules on annuity payments to beneficiaries have yet to be published. There is no clarity on how lump sum payments by trust-based schemes will be regulated. The FCA has yet to outline how providers need to interact with customers, especially those who refuse to take up Pension Wise guidance.
Evans will say: “The Government has simply not been able to deliver enough at this stage to ensure the reforms have a flying start when they go live.
“Critical pieces of the jigsaw are still missing and will not be in place in time. I see no point in a blame game and would hope this will not develop as the reforms go live, despite the pressures of the pre-election period.
“I would like all of us who are engaged in trying to deliver successful reform to commit to a ‘best endeavours beginning’ for early April where we recognise the inevitable challenges of a new system going live in a spirit of openness, constructive comment and determination to gain momentum as we all get used to how the new world is going to work. This is in everyone’s interests.
“We also need to be careful to remind the public that April 6 is not a deadline, it is simply the start of new freedoms. People should not be rushed into making quick decisions about pension savings they may have accumulated over thirty years.”
Tom McPhail, head of pensions research, at Hargreaves Lansdown, said: “These reforms are overwhelmingly popular and in the long term will do much to reinvigorate pension provision in the UK; just since the reforms were announced we have seen an extra £155 million being invested in the Hargreaves Lansdown SIPP in new contributions. Our worry is that because the reforms are being introduced so quickly, many pension providers won’t be ready in time.”