I have spent a lot of time over the last few months speaking to financial advisers about the opportunities and risks created by the new freedom and choice in pensions due to come into effect from 6 April.

There is no doubt that individuals with reasonable sized pension funds and who are prepared to pay for advice are in a good place to maximise the benefits of the new regime. Advisers and pension providers could however find themselves between a rock and a hard place.
There will be many individuals from defined benefit schemes who will want to transfer to a defined contribution scheme so they can fully access their pension. In addition individuals with defined contributions schemes may contact advisers wanting one off advice regarding stripping out their pension fund. From the discussions I have had most advisers see only a limited number of situations where they feel they would be in a position to recommend a transfer from a defined benefit scheme and giving one off advice on fully accessing an individual's pension is seen as too risky as there is a strong chance that their advice may be challenged at a later date should the individual hit hard times.


{desktop}{/desktop}{mobile}{/mobile}

It is not difficult to imagine a client getting irate when being told that they would be best to opt for their index linked pension rather than taking their pension fund to buy a property in Spain, which they have already paid a deposit on. Or where the member of a defined contribution scheme wants to access their fund completely for no other reason than they are concerned that there may be further changes in legislation, which may restrict access in the future.
Guidance to members will be available through Pension Wise but more often than not the outcome will be to seek professional advice. If individuals do proceed down this route they will then have to find an adviser who is happy to act on their behalf and then they may not get the recommendation they were hoping for.
The FCA are rushing in additional rules requiring pension providers to highlight to members seeking to access their pension to take regulated advice or seek guidance from Pension Wise.

{desktop}{/desktop}{mobile}{/mobile}


This is a sensible request but they also want the pension provider to ask the member about key aspects of their circumstances that relate to the choices they are making and provide risk warnings in response to the answers they receive. This appears to have been very much an after thought and although the FCA says this should not be construed as advice one wonders if the Financial or Pension Ombudsman will share their view. Only time will tell.