But Will There Be Enough Quality Advisers To Help Savers? Asks Pensions Experts At Law Firm Irwin Mitchell

The approach of April 5th and introduction of the new  highly heralded  "Pension Freedoms" together with recent announcements on pensions in the Budget, represents the biggest shift in pensions policy since the war, according to Martin Jenkins, Head of Pensions, at lawyers Irwin Mitchell. 

The Government has torn up the rule book on pensions.  There will now be a scramble by those wishing to realise the cash locked up in their pensions and the sums involved are huge.  UK employers (many of whom are struggling to fund long term pension liabilities) stand to benefit from the exodus  since the cost of providing long term salary related pension benefits has, and still does, represent  a huge liability for UK plc.

The Government’s own figures (PPF:  2015) identify pension liabilities of £1,300billion, with an operating deficit of some £40billion.  These are quite conservative figures based on the Government Pension Protection Fund Safety Net provision which does not guarantee all of the benefits.  If only a proportion of final salary pension scheme members decide to transfer so as to encash their pension rights,  then the funding gap can be dramatically reduced.
 
But at the same time,  as Jenkins point out, there is an advisory gap brought about by separate government changes to the financial and pensions advisory market.  These changes now move away from commission based products to all advice to be paid for as a fee and this very much increases compliance and training requirements. 

Martin Jenkins comments,

This situation is exacerbated  by the recent Budget announcement that the reduction in the Lifetime Allowance to £1million will mean that for many more pension savers, tax charges on pension funds mean an encashment looks even more the more attractive option.