What will it mean for consumers?
To answer this question depends entirely on how much is in your retirement pot. Those with less than £30,000 are more than likely to cash out using the new rules governing trivial commutation which allow up to £30k to be extracted at-retirement (as long as it is spread across at least three DC plans). Few are likely to even seek full financial advice before doing so. In an ideal world this group, which is the majority of us, will go to the Treasury’s Guaranteed Guidance (GG) service. We now know that the Citizens Advice Bureau will deliver face to face GG advice and The Pensions Advisory Service (TPAS) will deliver contact centre and web chat-based advice. But no one seems to know how many of the 400,000+ consumers reaching retirement each year, will actually pick up the phone (or their mouse) to use this free service. A recent pilot by Legal & General found only 2.5 per cent of retirees were planning to use it while Mr Webb himself believes some 15 per cent of Middle Britain’s retirees could use the service. Either way, that leaves an awful lot of retirees either looking for full fee-based financial advice or seeking no advice at all…self-guiding if you will.
This is potentially worrying stuff and looks like the Achilles heel in an otherwise noble endeavour of giving consumers more choice of how they want to spend their retirement savings now that AE ensures that some retirement savings are being amassed by the majority.
Natnaje Holt is managing director of the retirement solutions provider Dunstan Thomas
