Onside Issue 3 - Summer 2015 - 30

ONSIDE / GUEST COMMENT

PENSION FREEDOMS:

NEVER HAS FINANCIAL ADVICE
BEEN SO IMPORTANT
John Fox is one of the UK's foremost experts on
pensions and has closely observed the subtle shifts
and the dramatic changes to the pensions market.
As the managing director of Liberty SIPP, he knows
at first hand how the industry is changing and how
advice is more important than ever.

T

he much vaunted, publicised and misunderstood
"Pensions Freedoms" that have come into play at the
start of this tax year are the most significant changes to
the pension system since the Old Age Pension Act of 1908.
In his budget in March 2014, George Osborne not only
shocked the whole of the pension industry, but, in one
fell swoop, changed the very ethos on which pensions had
been built since 1908: "people can't be trusted with their
pensions so restrict the access they have to them".
This 'old school' view of pensions was very much raised
on the "thou shall not" approach which was backed up by
severe restrictions on what could be taken out of a pension,
governed by complicated calculations dreamt up by the
mandarins in the Government Actuaries Department and
policed, if anyone dared to think that their pension was
their money and they knew best how to deal with it, with
hefty tax charges to deter them and catch the unwary misled
by shady advisors.
We now live in a brave new world where at the age of 55 a
pension saver can, should they so choose, take their pension
funds out of their schemes at whatever time and in whatever
size chunks they wish. Whilst such access is only available
to clients with defined contributions (money purchase)
schemes rather than defined benefit (final salary schemes)
this still represents a big percentage of the 'at retirement'
population and around £7bn of new funds each year.
But, the question remains, is this a good thing?
As a measure, the pension freedoms had their origin in

30

the frustration felt by the
government
about
the
conduct of the annuity
industry. For years they were
very much the default option
for the 400,000 retirees each
year, representing an annual
influx of funds of around
£11bn a year into the life
company's coffers - which
was nice! The government
weren't happy with the
lack of competition in the
industry, the poor rates
being offered to customers
and the way in which
annuities were marketed.
Sledgehammers to crack a
nut are not an uncommon
approach by governments
when it comes to pensions
but this one could have a
multitude of implications.
The reason why there were restrictions in place in the
ancient regime were to ensure that pension funds couldn't
be exhausted and that in old age and possibly ill health,
there wouldn't be too great a burden on the state to support
the pensioner. This, under the new rules, could become an
all too common occurrence for those who see the pound
signs as they approach 55 and start to think about how they
can utilise any pension savings.
In the midst of this laissez faire approach to pension saving
there has never been as much need for people to have access
to experienced and suitably qualified financial advisors.
The government has launched the much criticised "Pension
Wise" service and whilst it is still early days in their



Table of Contents for the Digital Edition of Onside Issue 3 - Summer 2015

Contents
Onside Issue 3 - Summer 2015 - Cover1
Onside Issue 3 - Summer 2015 - Cover2
Onside Issue 3 - Summer 2015 - Contents
Onside Issue 3 - Summer 2015 - 4
Onside Issue 3 - Summer 2015 - 5
Onside Issue 3 - Summer 2015 - 6
Onside Issue 3 - Summer 2015 - 7
Onside Issue 3 - Summer 2015 - 8
Onside Issue 3 - Summer 2015 - 9
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Onside Issue 3 - Summer 2015 - 11
Onside Issue 3 - Summer 2015 - 12
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Onside Issue 3 - Summer 2015 - 30
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Onside Issue 3 - Summer 2015 - 34
Onside Issue 3 - Summer 2015 - Cover3
Onside Issue 3 - Summer 2015 - Cover4
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