On 21st July 2014, the Treasury released a statement from the Chancellor of the Exchequer outlining the radical overhaul and reform of the pensions system. How this could affect you will be explained in the article below.
Currently, upon retirement, contributors to a pension fund are asked whether they would like to take a tax-free lump sum amounting to 25% of their total fund. However, as of April 2015 the Government are to allow free and flexible access to pension funds as
the reform proposals in the 2014 Budget are implemented.
The radical overhaul places emphasis on giving back free choice and allowing those who have responsibly saved for retirement, to rightfully make responsible decisions about how to enjoy the fruits of their labour.
With that, the Chancellor announced on Wednesday that a free and impartial advice service will be set up, allowing pensioners the chance to discuss and make sensible financial decisions with independent advisors.
In order to secure the credibility and impartiality of the service, the Government announced that it will be set-up and operated by bodies such as the Pensions Advisory Service and the Money Advice Service as opposed to the pension providers themselves. Additionally,
the Chancellor welcomed interest from bodies such as Citizens Advice and Age UK and provided further scope for discussions to take place as to their involvement.
However, there have been concerns raised in relation to several features of the system. One such reservation relates to the ability to implement the system before the April 2015 deadline, described by the Association of British insurers as “aggressive” and
by the Money Advice Service as “challenging”. Moreover, concerns are being raised with regard to the involvement and impartiality of the Money Advice Service in the scheme, especially considering its status as a statutory body.
Nonetheless, having reservations and queries about a new, unprecedented system is to be expected, and the Government should be praised for promoting financial freedom amongst those that certainly do deserve it.
Here at Berg, we look forward to the implementation of the new scheme and welcome any queries from savers who would like to know more about it.
For more information about any of the above or for practical advice on this or any other aspect of banking and financial disputes, please contact
Kalvin Chapman of the Berg Banking Litigation Team on 0161 833 9211 or email him at
(The information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Berg or any of its partners or employees. Professional legal advice
should be obtained before taking, or refraining from taking, any action as a result of this article.)