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23 Mar 2016

Let workers access pension cash to fund financial advice, says watchdog

A leading financial watchdog has recommended that workers be able to access their pension funds early in order to pay for much-needed financial advice ahead of their retirement, This is Money reports.

According to a newly published report from the Financial Conduct Authority, entitled the ‘Financial Advice Market Review´, there is a “a clear need for intervention to improve access to advice” of this kind.

It is now time, the watchdog argues, to “break down the barriers” faced by consumers who are struggling to afford financial advice. It also added that “mass-market automated systems” could be better utilised to provide information to savers about what they can do with their money.

The report also lent its support to the idea of a ‘pensions dashboard,´ whereby savers can view all the information about their pension savings in one easy-to-navigate place.

There have been numerous concerns expressed about ordinary savers finding it difficult to manage their finances. While the pension reforms introduced last year have given savers more control over their retirement plans, they have also brought more choice and, as a result, a greater degree of confusion.

The more recent introduction of upfront charges for financial advice has made some savers reluctant to seek help, while certain advisers reject savers with smaller pension pots, arguing that the cost of advice would be unwarranted.

Add to this new research indicating that over a third of people in the UK have ‘low´ or ‘extremely low´ interest in personal financial matters, the report suggests that people need ‘nudging´ to seek financial advice at critical stages of their lives.

The review concludes that allowing people to access a small amount of money from their pension pot before they retire, “will ensure consumers can access financial advice at a key milestone in their lives and feel confident in making financial decisions as they approach retirement.”

Copyright M2 Bespoke 2016

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