The Treasury’s unprecedented pension shake-up has been rebuffed as “well-intentioned but riddled with unintended adverse consequences” by the boss of one of the world’s largest independent advisory organisations.
Nigel Green, the founder and chief executive of deVere Group, is speaking out after David Gauke, the financial secretary to the Treasury, today set out the legislative changes to the pensions systems that were outlined in Chancellor George Osborne’s Budget in March.
One of the reforms is to provide “free impartial advice” to savers, who from next year will have unlimited access to their pension pots.
Mr Green comments: “With increasing flexibility, by giving unrestricted access to pension funds – something which to my mind is ill-conceived and flies in the face of the whole ethos of a pension – comes increasing responsibility for pension members.
“Following warnings from the Financial Conduct Authority (FCA), amongst others, that individuals might not necessarily have the financial literacy to always make the most informed decisions, the offer of State-funded free advice was announced to help overcome this issue.
He explains: “Originally, it was heralded as always being face-to-face guidance. It now becomes apparent this advice could be online or over the phone. This was, in my mind, always the government’s intention, as the offer of the right to free, face-to-face advice was always going to be too expensive to roll out to millions of retirees across the country.
“But it is not solely the delivery; it is the advice itself that is my main concern. It will be of the ‘one-size-fits-all’ variety. It will be dangerously generic because to do it any other way, again, is prohibitively costly for the government.
“Naturally, this is a major worry as each individual has specific financial circumstances, needs and objectives and these cannot and will not be taken into account. Making mistakes in your personal finance strategy can prove to be extremely difficult to overcome and could have devastating financial and lifestyle implications.
“It is almost universally accepted that the best way to ensure you are consistently on-track to reach – even exceed- your financial goals, is to sit down with an independent financial adviser to devise, implement, and then regularly review a tailor-made strategy.
“As such, the Treasury’s plans are well-intentioned but riddled with unintended adverse consequences.”
Mr Green concludes: “With increased rights comes increased responsibilities. If the government is unable to provide each and every person with free, tailor-made, impartial advice as and when they need it, it should not be scrapping restrictions on pension access.
“The risks for individuals’ finances and, therefore, the long-term, sustainable growth of the economy, are too high.”