Free advice on how to spend your pension

MILLIONS of people will get free, impartial advice on how to make the most of their retirement savings under George Osborne’s radical shake-up of the pension system.

Chancellor offers help to millions after pensions shake-up in Budget. Picture: PA

The announcement follows a consultation on the reforms set out in the Budget, which increased the flexibility for people to access their pension pots.

The guidance will be delivered by independent organisations, including The Pensions Advisory Service and the Money Advice Service and follows concerns consumers would not trust information given by those with a vested interest in products.

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Chancellor George Osborne said: “It’s right to support hard-working people that have taken the long-term decision to save for their future, and I’m pleased that the responses we had to our proposals on making pensions more flexible have been overwhelmingly positive.

“We’re making sure that people have the right support to make their own choice about how best to finance their retirement and I’m pleased to confirm that everyone with defined contribution pension savings reaching pension age will get free and impartial guidance on their range of available choices at retirement.”

In total, 18 million people will be able to benefit from the changes to pensions should they wish to do so. From April next year, 300,000 people a year with defined contribution pension savings will be able to access them after turning 55, subject to their marginal rate of tax.

The Government’s response to the consultation, published yesterday, confirmed they will continue to allow individuals to transfer from private sector defined benefit schemes to defined contribution pension schemes, subject to two new safeguards: a requirement to take advice before transferring and new guidance for trustees.

Ros Altmann, the Government’s older workers’ business champion, said: “The decision that guidance must be impartial and separate from the industry is a real game-changer.

“The challenge is now firmly with the industry to develop the products that people need, rather than simply the products they wish to sell.”