Pensions freedom one year on

The financial services profession witnessed a real flurry of people keen to take advantage of this new freedom from the outset; people who had – undoubtedly – been waiting.  But this high demand soon fizzled out and many have become stuck in a catch 22 situation where they cannot access their money without advice.

The pensions freedom, coupled with the reduction in the lifetime allowance and pension tapered relief from 6th April, have really put the subject of pensions on peoples’ radar. We have seen an increasing number of people take the time to understand the impact of the changes.  Whilst some view these as negative, for the majority, this has been very positive.  The changes have acted as a catalyst to encourage them to truly consider their retirement plans and to actually think about, and take, financial advice.

The flurry of activity around pensions in the last year has meant that it has become easier to grab people’s attention regarding retirement planning; to educate them that it is not just about pensions anymore.  It is an on-going journey whereby people should seek professional help to consider their entire financial situation, ideally through a bespoke cash flow forecast.

In ever increasing numbers, we are seeing more employers wanting to provide help, guidance and access to advice to their valued employees.  They’ve identified that they have a part to play in helping their staff plan successfully for their future retirement.

So whilst the changes may impact negatively for some high earners, in reality, for most, the changes the pension freedoms have brought about is having a positive impact.  It is bringing individuals’ retirement plans into sharper focus, which will ultimately reduce the levels of procrastination that many people are guilty of by taking action now.

By Darren Laverty, Employee Benefits Partner at Secondsight