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Pensioners are being left to fend for themselves, says TUC

The TUC has recently spoken out about the lack of help available for people when they retire and are about to start accessing their pension. They say that more than 300,000 pension savers a year are being left to fend for themselves when they retire.

They claim that over 80% of people using their pension savings to buy a retirement income receive no proper advice about the procedure and best practice for their circumstances. These findings and figures come from the year following the ‘pension freedoms’ introduced in April 2015.

These ‘pension freedoms’ were introduced last year so that anyone over the age of 55 can withdraw as much money as they like from their pension savings, all subject to income tax.

Defending their ‘pension freedoms’, the government said that free help was available from the Pensions Advisory Service and Pension Wise. Although free advice is great for those on low and middle incomes, the advice from these services is general and specific, individual advice comes at a cost, a very expensive one for many.

During its analysis of the figures to April 2016, the TUC said no professional advice was sought by anyone who withdrew a cash lump sum from their pension. Only 15% of those setting up a drawdown policy received advice whereas 73% buying an annuity (an income for life) consulted a financial advisor.

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Due to the expense of financial advice for most people, the TUC is concerned that many could buy the wrong products or fall victim to scams. General secretary of the TUC, Frances O’Grady, said; “Pension freedom may sound great on paper… But it is not liberating to leave hundreds of thousands of people to fend for themselves in what is now a very complicated and expensive part of the pensions market.”

Pension provider LV= echoed the same warning when it said pensioners could become part of a mis-buying crisis. They added to their comments by saying that the government’s guidance service, Pension Wise, should be compulsory to use for those about to access their pension pot.

To further improve guidance services surrounding pensions, the TUC wants government backed National Employment Savings Trust (NEST) to offer retirement incomes as well as the savings schemes it already offers.

A Department for Work and Pensions (DWP) spokesperson commented on these findings by reiterating the government’s aim for simpler pensions; “We want everyone to have a financially secure retirement, which is why we have introduced wide-ranging reforms to make pension saving easier and clearer,”

If you are retiring soon, planning your retirement or thinking about consolidating a number of pensions together, get in touch with an independent financial advisor (IFA) as soon as possible. They will be able to give you plenty of advice and services such as Pension Wise and Pension Advisory Service are free for all to use.

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