Following the Pension Reform
200,000+ British pensioners have opted to cash in some or all of their pension pots following the relaxing of the rules for over 55 year olds in April 2015. The Financial Conduct Authority (FCA) report that the take up on the pension freedoms is high, that fraud schemes are lower than expected and they are by large happy with the advice being given by financial advisers regarding pension options.
Keeping score
In the three months following the Pension Reform, over 200,000 pensioners accessed their pension funds, according to FCA figures, more than double that from April to June 2014.
The Association of British Insurers (ABI) recorded over 2.5 billion in pension payments during this initial period. The majority of funds were paid in cash, rather than transfers to other investments. Subsequently, the FCA reported that annuity purchases plummeted from 90,000 in 2014 to just under 12,500 in 2015, for the same three months.
Is it necessary to watch for fraud schemes
There was concerns for increases in pension fraud schemes following the reform. However, it appears that fraud isn’t spiking unusually and in fact the FCA are investigating over 150 pension fraud cases, only 4 of which relate to the Pension Reform.
“We are seeing activity in this area, but I don’t think it’s causing more people to come in as potential fraudsters,” Christopher Woolard, FCA
Are retirees getting the right advice?
The FCA are carrying out various inspections on financial advisors to ensure service meets the regulations. So far they report they are happy with the advice regarding cashing in pensions.
Pension Wise guidance is now available from The Pensions Advisory Service (TPAS).
Dental & Medical Financial Services offer a trusted service for all your financial requirements. If you are deciding whether to cash in your pension, contact our team in advance to discuss your options.