19 January 2015
Nick Fitzgerald, Head of Financial Planning at Brewin Dolphin wealth management provides the below comment on Pension Wise, the new pensions guidance service.
“Whilst it is encouraging to see a platform where pension guidance will be freely available to all ahead of the biggest pension changes in a generation, we must remember that there is no substitute for comprehensive holistic financial planning advice. The gap between the best and worst annuity in the market can typically be as much as 30%1, so whether or not annuities are to be part of your funding for retirement post 6th April, getting advice from qualified financial planners is key. This is fundamental when studies 2 have shown that pensioners underestimate their life expectancy by between 5 and 10 years which can cloud their planning and could make for a very uncomfortable retirement. Savers must also be aware of the so-called advice of the unqualified and unregulated firms out there who are keen to give advice and get their hands on pension pots too. So we welcome the concept of guidance and only hope that it will help point people towards the right regulated investment advice.”
1 Source Association of British Insurers (ABI) Example rate table November 2014. Brewin Dolphin has used the ABI annuity table example (see link below) the difference on the given example of a 58 year old male in Newcastle with a typical £32k pension pot taking 25% Tax free cash and an annuity of £24000 = £933 a year lowest / £ 1229 Highest
2 Source: MGM Advantage research among 2028 UK adults, 314 of which were aged 55-64, conducted by Research Plus Ltd, fieldwork 17-22 October 2013. Respondents were asked “Being as realistic as you can, approximately how old do you think you’ll live until?” Source: MGM Advantage analysis of ONS cohort estimates of life expectancy – 2012.
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