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25 Mar 2015

Hold Off Making Pension Plans Until Autumn, Minister Warns

Pensions Minister Steve Webb has advised those over the age of 55 to hold off withdrawing money from their pension pots until later in the year, amidst fears about expected fraudulent activity, the Financial Times reports.

As of this April, major reforms to pension legislation will come into force allowing anyone over the age of 55 – even if they are still in work – to cash in their pension savings whenever they like, without having to buy annuity beforehand. The government estimates that some 540,000 people will be eligible to do this in just a matter of weeks.

But according to the article, the Liberal Democrat pensions minister is warning savers to take “a big deep breath” before making any significant decisions about what to do with their money. He told the publication:

“Obviously, there´s probably someone out there who just needs to fix it straight away and they want to pay off their mortgage or whatever it is […]

“But for the vast majority of people give it say a few months, give it to the summer, until the Autumn, because it (the market) will calm down […] Over the coming months and years there will be new products and variations”.

In addition to this, Webb expressed his concern about a “whole range of scams” that are likely to emerge after April 6, which he wants savers to be fully aware of. This is where he thinks the government´s Pension Wise initiative – a free pensions guidance service – will play an important part, warning people about the risks that are out there.

But financial experts are worried that this service will not be able to meet the expected high demand, with just 244 Pension Wise staff currently ready for action, and savers unable to book a face-to-face appointment.

The minister, however, assures that his department is prepared with extra capacity and “hundreds of Department for Work and Pension staff being trained.” He also reminds savers that they do not have to do anything with their savings on April 6 if they do not need or wish to.

Copyright © M2 Bespoke 2015

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