An editorial by Which? magazine in June 2018
Can I get free advice at retirement?
If you’re unwilling or unable to pay for financial advice, you can get free guidance, in some cases ‘personalised guidance’, from a number of government-provided services – Pension Wise, The Pensions Advisory Service (TPAS) and the Money Advice Service. Which? used undercover fieldworkers to make a number of calls to the services in June 2018 asking for assistance with plans to cash in a £100,000 pension to pay off an outstanding mortgage and to consolidate three pensions into a single plan.
Pensionwise
Pension Wise was set up in 2015 to coincide with the introduction of the so-called pension freedoms. You can have a conversation over the phone (which we opted to do) or face-to-face, but you must be over the age of 50 and have a defined contribution pension. Despite the current eight-week wait for an appointment, our mystery shoppers eventually dealt with well-informed call handlers who asked personal questions and then covered the chosen retirement option in detail. The calls follow the same broad format, lasting about 45 minutes – questions about the consumer’s finances, health, family situation and pension provision , followed by points to consider with the preferred option, and finally an overview of the alternatives . In our scenario, the call handlers had some insightful observations about the tax liability if you take a pot in one go, even working out how much exactly you would pay in tax, and also gave clear warnings about potential scams.
The Pensions Advisory Service
Callers to The Pension Advisory Service (TPAS) can get straight through to someone to discuss their question. Our first call about cashing in the pension was fairly succinct, with the caller told to contact her pension provider, phone Pension Wise or seek financial advice. The other telephone call was more productive, with tax implications discussed and the dangers of having no alternative retirement income highlighted. Conversations about pension consolidation were again quite brief. However, some key considerations around the flexibility gained by keeping the pots separate, the potential loss of benefits and possible transfer penalties were outlined by TPAS . A point about managing separate pots effectively in the post-2015 world was particularly insightful.
The Money Advice Service
The Money Advice Service covers all financial issues, with phone menu options for debt, pensions, benefits, home/mortgages and ‘other’. If you choose pensions, you’re connected to someone at TPAS. We chose the mortgages option and explained we wanted to pay off our home loan by cashing in a pension. Speaking to a financial adviser was immediately suggested and some help given to find one. By their nature, the guidance services featured above will have their limitations. Call handlers can outline options and provide impartial guidance (sometimes ‘personalised’ to reflect your individual circumstances), but they can’t provide financial advice or recommend specific products.
Should I pay for financial advice?
While the costs may seem high, paying for professional advice could be an invaluable investment – especially if you have little experience investing. A financial adviser has the tools and experience to help you plan for a future without work and make sure your savings last throughout your retirement.
When should I see an adviser?
An adviser can add value when you’re considering complex products, such as pension drawdown or investments, or significant decisions in life, such as retirement or arranging care, and don’t have the time, knowledge or confidence to make decisions yourself.