We're calling on the pensions minister, Ros Altmann, to make sure that pensioners are able to take advantage of new freedoms to access their pension savings.
Major pension provider Friends Life has told customers who asked to withdraw a chunk of their cash that it cannot offer them this option. Customers can choose to withdraw the full amount, incurring a substantial tax bill, buy an annuity, or move to another provider.
Which? executive director, Richard Lloyd, said:
'It's clear the Government now needs to intervene to get pensioners fair treatment and flexible access to their cash without being stung. We're asking the new Pensions Minister to prove her consumer credentials and make this her first priority.
'With providers not stepping up to the plate, a Government-backed drawdown provider should be established sooner rather than later.'
The Chancellor announced a welcome shake up on Isas and annuities in the 2014 budget to help struggling savers. News on pension reforms, however, is still on hold.
The Chancellor increased the Isa allowance from £5,760 to £15,000 to allow savers to earn more from their savings. He also set out plans to make Isas simpler by merging the cash and stocks Isas to create a single Isa. These changes were outlined to 'to help savers by dramatically increasing the simplicity, flexibility and generosity of ISAs.'
We believe that hiking the Isa limit will encourage more consumers to save, although we also now need to see more competitive interest rates from banks that have slashed these repeatedly in recent years.
On pensions, the Chancellor said: 'We’re going to introduce a new guarantee, enforced by law, that everyone who retires on these defined contribution pensions will be offered free, impartial, face-to-face advice on how to get the most from the choices they will now have.'
People will now have greater flexibility in how they access their pensions, including being able to take more out from their funds. The Government is consulting to introduce even more flexibility from 2015, by enabling you to take all of the money out of your pension and pay tax on 75% of it.
We believe the overwhelming majority of people who buy an annuity from their existing provider could get a better deal on the open market
Our executive director, Richard Lloyd said: 'Today's announcement should help stop millions of people from losing out on thousands of pounds of retirement income.'
‘The key to making this work will be a requirement on providers to give consumers high quality, impartial advice on their options across the whole of the market, with maximum protection at this critical time in their financial lives.’
We’re now looking to the financial industry to raise its game by offering better value products and genuinely impartial advice, so that millions of consumers get the best possible return on their savings and investments.
The Government has committed to greater transparency on hidden pension charges in a win for our Hands off my Pension campaign.
We lobbied the Government for a ban on consultancy charges for work place pensions and won.