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Guaranteed pensions advice to be independent, Government says


The guaranteed advice on employees taking their pensions from April 2015 is to be provided by independent organisations, the Government announced today.

The decision follows a consultation, Freedom and Choice in Pensions, which ran from 19 March to 11 July with the aim of establishing the best way to implement the changes announced in the Budget.

Originally, the Government intended that pensions providers would give advice to savers looking to take out their savings at 55-years-old. After concerns about conflicts of interest, today's announcement means that third-party organisations will now offer this advice in their place.

The other main change is that not all this advice will be given face-to-face, as previously stated. Some consultations may be over the phone or via email.

Chancellor George Osborne stressed the changes give savers the "right support to make their own choice".

"The Government wants to ensure that guidance is trusted by consumers," he said. "And the vast majority, including most of the financial services industry, said that consumers would not trust guidance given by a person or organisation with a vested interest in selling a financial product or service."

Hargreaves Lansdown head of pensions research Tom McPhail called the decision to opt for "demonstrably independent advice" a sensible one.

However, he did raise concerns about the resources available to provide the service. He also questioned the Government's lack of action on "closing loopholes".

"We know there is an issue with potential recycling risks – this is where money is taken from a pension and then recycled back into the plan in order to gain further tax relief," he said.

"There will have to be some complicated controls put in place to curb recycling. For example, anyone who has taken benefits from a pension may have a lower annual allowance of £10,000."