Personal Pension  

ABI warns consumers not to rush for freedoms

ABI warns consumers not to rush for freedoms

The Association of British Insurers has launched yet another campaign to remind customers what they need to know if they want to take advantage of next week’s pension freedoms.

This latest drive comes in the form of six points, the first of which is a reminder that 6 April is not a deadline and that there is no rush to make big decisions about your retirement income.

The second point was a reminder that pension pots may have important features affecting choices. The ABI explained that if individuals have a guaranteed annuity rate then the government wants to make sure they take financial advice before accessing the fund as they could be worse off by doing so.

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In line with previous awareness drives, it again warned people to beware of pension scams and also noted the tax implications of taking an entire pot or large parts of it as cash.

The ABI, Financial Conduct Authority and various pension providers have all come out in recent months with similar warnings.

It also warned about the tax implications of accessing the whole pot. In February, HM Revenue and Customs published a range of different scenarios in an attempt to clarify what the tax situation would be. Prior to this, FTAdviser revealed that those individuals who take a sizeable one-off lump sum under next week’s new freedom could face a complex wrangle to reclaim overpaid tax, amid confusion over the situation for in-year repayments.

The industry body also suggested contacting the Pension Wise and its own ‘Your Retirement, Your Choice’ for help in considering options.

Louise Hanson, the ABI’s director of advocacy, said: “Don’t panic, don’t rush and don’t be tempted to dash for the cash.

“April 6 is the start of a new pensions era and not a deadline to act. The only sensible advice is to take time to fully consider your options and contact the free, impartial Pension Wise service.”