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Scottish Widows response to Pension Freedoms report: Need to go further on guidance and advice

Today the Work and Pensions Committee has released its report into the success of Pension Freedoms, as well as its recommendations to help savers make better decisions about their money.

Pete Glancy, Head of Policy at Scottish Widows comments: 

“The concern when pension freedoms were introduced that people would blow their retirement savings on a frivolous purchase has proved to be unfounded.

“But there is still a real risk that people dipping into their pension will run out of money, as they navigate a minefield of judging life expectancy, their own future needs and stock market performance.

“We’ve seen the power of the behavioural nudge in getting 10 million people saving through auto enrolment, so automatic appointments for guidance on how to make better decisions in retirement should be welcomed. We trust the Government has a plan to ensure sufficient capacity to deliver this before creating a huge increase in demand.

“However, guidance will always be limited in impact over advice. The idea to increase the advice allowance above £500 is good for those who can afford it, but will eat a larger proportion of pension pots for those with smaller savings. Another solution could be to allow experts to offer advice at a lower cost – perhaps through a halfway house where personal recommendations can be made with a different level of liability for the adviser.

“We also welcome the plan to trial guidance intervention at the age of 50, rather than only when people look to access their money, by which time they’ve already made their mind up on how they plan to use it.”

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