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June 13, 2014 7:04 pm
Savers approaching retirement could be offered group guidance on their financial options, rather than a one-to-one session, under proposals being considered by the government.
In March, chancellor George Osborne promised that savers aged 55 and over would be offered a new right to free, impartial and face-to-face advice on their options at retirement.
The new Guidance Guarantee was designed to underpin radical reforms to pensions that will allow savers aged 55 and over to take their entire pension pot as cash from next April.
But this week it emerged the government is considering offering these sessions on a group basis, to help deal with the costs.
“Face-to-face – the chancellor used that phrase – and we will honour that of course, but that’s very expensive,” Steve Webb, pensions minister, told the Financial Times.
Three months after the chancellor’s Budget announcement, ministers have yet to decide how to offer the guidance or who will pay for it, and the pensions industry is growing restive.
“So, for example, if face-to-face meant every individual – and lots of them – sitting down for an hour with somebody everywhere in the country, that would be very, very expensive.
“Face-to-face could involve groups, for example, as a lot of the conversation is generic. The things that people need to know, they all need to know.”
The government is considering how the advice will be delivered with options including telephone and internet-based guidance sessions, as well as individual face-to-face sessions.
Mr Webb also said this week that he was optimistic his proposals for a flat rate 30 per cent tax relief on pension contributions would be in the Lib Dem manifesto.
Get an idea of how much you should consider contributing and how much you could receive when you retire with our pension calculator
Currently, savers enjoy tax relief at their marginal rate. Introducing a new system of flat-rate tax relief would penalise the well-off but could benefit many savers on lower incomes, giving them a greater incentive to save.“
A significant majority of pension savers would get more tax relief, which seems like a good thing to me,” the minister said.
As part of his plans, Mr Webb also wants to abolish the £1.25m lifetime limit on pension saving that qualifies for tax relief. That limit has already been cut from £1.8m in 2010/11 while the annual relief has been reduced.
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