Following this year’s Budget, pension providers are concerned about the consequences of people entering into drawdown contracts without taking financial advice.
New freedoms announced by Chancellor George Osborne in March are expected to result in thousands more people entering into drawdown contracts from April 2015, including those who previously would have bought an annuity or not had big enough pots to qualify.
Consequently, many independent financial advisers and pension providers remain worried that solutions which sidestep advisers could leave savers unprotected.
Adrian Walker, retirement planning manager for global investment firm Old Mutual Wealth, questioned whether drawdown can ever really be simplified.
“As a provider, we’ll only see the pension part of a client’s jigsaw,” Mr Walker said.
“If we try to filter using a relatively simple set of questions for a consumer that doesn’t take into account the full extent of the planning, there may be some wrong outcomes in one form or another.”
Gareth Evans of Royal London Group warns that if clients do not take advice “at the moment, people who draw down their money too quickly won’t have a case if they complain someone should have stopped them”.
Meanwhile, eValue Investment Solutions’ strategy director Bruce Moss agrees there could be an adviser “capacity crunch” over drawdown.
Mr Moss said: “Drawdown has been quite a technical area and is different to other areas of financial planning because it is ongoing.
“As an adviser, you need to be G60 qualified and there are few people who have reached those lofty heights because it’s quite a niche area.”
If you are nearing retirement, thinking of accessing your pension pots or simply wish to see what the new rules mean to you, then advice is essential so please get in touch.