MSE News: Free pension guidance service branded ‘Pension Wise’

"The impartial guidance that will be offered alongside the pension changes coming into force in April will go under the name Pension Wise..."
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Free pension guidance service branded ‘Pension Wise’

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  • jamesd
    jamesd Posts: 26,103 Forumite
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    There's a substantial mistake in the "Only 45% of those retiring to get full 'single-tier' state pension" story which wrongly says "The current means-tested state pension". The current state pension is not means tested. Nor is the new one.

    There is a means tested top-up via Pension Credit that could increase the current state pension to just below the single tier level.
  • jamesd
    jamesd Posts: 26,103 Forumite
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    The Pension Wise article claims that "If they want to withdraw the whole pot, they're charged 55% tax". This is wrong. It is not permitted to withdraw the whole pot except under small pots, triviality rules or with Flexible Drawdown or other exceptions but if it is somehow done even though pension providers know they aren't allowed to do it the penalties are at least 55%.

    Technically such an attempt is an "unauthorised payment" and is subject to these charges:

    40% unauthorised payments charge
    15% unauthorised payments surcharge
    15-40% scheme sanction charge

    The pension scheme will probably try to recover the sanction charge from their customer if they were somehow tricked into making the payment.

    The current wording is akin to saying "if you want to hit someone there's a charge of £500". It's not permitted to hit someone in the first place, the fine isn't the important part, the ban on doing it is what matters.
  • jamesd
    jamesd Posts: 26,103 Forumite
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    The Pension Wise article states "Under the changes individuals will be able to take a series of lump sums from their pension fund, with 25% of each payment tax-free and 75% taxed at their marginal rate of income tax in that year. They will not have to enter into a drawdown policy."

    That is true but it is also true that a person can enter into flexi-access drawdown and take a 25% tax free lump sum from all or any part of a pot and as much of the 75% whenever they want. This choice is likely to be better in most cases then the Uncrystallised Funds Pension Lump Sum (UFPLS) method described in the quoted text because it offers greater freedom over the mixture of tax free and taxed components than UFPLS.
  • SnowMan
    SnowMan Posts: 3,356 Forumite
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    A treasury update on the Pensions Guidance service can be found at

    https://www.gov.uk/government/publications/delivering-pensions-guidance-january-2015-update/delivering-pensions-guidance-january-2015-update

    Some interesting new points
    - face to face sessions expected to last 45 minutes
    - cost £35 million per annum (on top of £20 million set up costs)
    I came, I saw, I melted
  • gadgetmind
    gadgetmind Posts: 11,130 Forumite
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    jamesd wrote: »
    This choice is likely to be better in most cases then the Uncrystallised Funds Pension Lump Sum (UFPLS) method described in the quoted text because it offers greater freedom over the mixture of tax free and taxed components than UFPLS.

    It also gets the money out of the (often) taxed environment of a pension and into more tax efficient income generators.

    I'll definitely use flexi-drawdown, but it won't really matter for my spouse, so we'll look long and hard at the fees for the two options.
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
  • thewhiteavenger
    thewhiteavenger Posts: 291 Forumite
    edited 13 January 2015 at 7:17AM
    CAB features heavily here in the face-to-face delivery. Anyone know if they will be ready with this by April? Seems a big 'ask'

    The update goes on about 'visiting a CAB' - where I live the office is only open half a day per week, is on the verge of closing for good because the council is pulling their funding.

    I'm also wondering how useful this 'guidance' is going to be considering it won't be 'advice'

    I'm not the only one wondering, it seems

    Concern over Citizens Advice pension guides
  • SnowMan
    SnowMan Posts: 3,356 Forumite
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    edited 13 January 2015 at 9:30AM
    CAB features heavily here in the face-to-face delivery. Anyone know if they will be ready with this by April? Seems a big 'ask'

    The update goes on about 'visiting a CAB' - where I live the office is only open half a day per week, is on the verge of closing for good because the council is pulling their funding.

    I'm also wondering how useful this 'guidance' is going to be considering it won't be 'advice'

    I'm not the only one wondering, it seems

    Concern over Citizens Advice pension guides

    Speaking as a CAB volunteer, the volunteers and staff at the bureau I am based at are more skilled and committed than anywhere I've ever worked in the past.

    That said it is clear that this guidance is something that is going to require caseworkers with pensions experience for it to work.

    The deadline for applications for face-to-face caseworkers at the CAB was yesterday I believe. A friend of mine with very extensive high level pensions experience has applied in my area. The question is will the CAB be able to get this calibre of candidate with pensions experience generally? And yes it is going to be hard to get things in place by April.

    The actual CAB delivery centres haven't been announced yet. There is a high level treasury principle that face to face advice is available within a 30 minute drive of any person. So I would envisage that caseworkers would need to travel from the delivery centres to individual bureau to see clients.

    The bureau where I used to volunteer closed down due to lack of funding. Unfortunately that is happening throughout the country. Fortunately the bureau that I now volunteer at has brought back a service in the area affected by the closures, but in other areas people just don't have a local CAB anymore. In terms of getting into the system for pensions guidance you will be able to contact a central number so it won't mean a visit to the local CAB to register (although access to register should be available at any CAB bureau including those that aren't delivery centres). Don't forget you can always opt for the telephone guidance via TPAS.

    I do think that people will find the guidance service useful but only time will tell. Getting a full understanding of all your pensions and options (and their relative merits etc) and a plan together has to be a starting point. Have a skim look through this thread ; no advice was given there only guidance but I think Mike found it very helpful. Given that the guidance is free then why not give it a go.
    I came, I saw, I melted
  • gadgetmind
    gadgetmind Posts: 11,130 Forumite
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    SnowMan wrote: »
    Have a skim look through this thread ; no advice was given there only guidance but I think Mike found it very helpful. Given that the guidance is free then why not give it a go.

    That thread was also about a fairly complex DB situation rather than the simply question of "What can I do with my DC pot?"

    However, I guess a fair few folks will have a combination of DB/AVCs/DC and I do wonder how those giving the guidance will handle this?
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
  • Linton
    Linton Posts: 17,101 Forumite
    Name Dropper First Post First Anniversary Hung up my suit!
    Having heard about annuities and drawdown the customer may well wish to go for drawdown. Will the CAB or whoever be able to tell the tell them how to go about it - eg on line SIPPs or PPs and what investments are required to provide a reasonable chance of withdrawing say 4% annually without running out of money?

    My concern is that people will go for drawdown but not have the knowledge to set it up sustainably, cant get the specific "advice" from CAB and will not have the pot size to interest an IFA.
  • Mirador
    Mirador Posts: 58 Forumite
    If the new service is to provide information only, then once that information is given, the individual will then still be required, by the pension providers to take professional advice and so will still need to consult an IFA. Right or wrong?
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