Pensions - Articles - Royal London comment on DWP call for Pensions GAR

 Our initial review of today’s proposed changes does appear to make the valuation that is required to check whether a customer must seek advice much simpler. This clarity will be very welcome; using the transfer value is a good solution and would mean that fewer people will be forced to take advice where the valuation pushes them just over £30,000.

 Use of a strong risk warning statement, would also be recommended as the GAR may be worth up to twice the fund value.

 There also needs to be an appropriate advice service in place to support customer demand. Royal London previously called for the Pension Wise guidance service to be the first port of call for customers, including those with guarantees, so the value of the safeguarded benefits may be explained to them, where they are not able to obtain advice from an adviser.

 Pension Wise has proven expertise in all aspects of pensions and is genuinely impartial. If this proposal was introduced this would mean that providers would then be able to accept customer requests for encashment of their pension, if they were able to prove that they had been through the Pension Wise process and understood the implications of giving up any guarantees.

 There would still be an important role for qualified advisers in the retirement income market, as they could continue to help those with more complex needs. For example, advising those customers with defined benefit pension pots above £30,000 contemplating a transfer to the defined contribution pension regime, where advising on the potential transfer is a more specialist skill.”