Pension transfer to encourage flexibility?
30-01-2012 10:52
Many savers could be faced with disadvantages when setting aside money for later life in traditional pension schemes.
This is according to director-general of Saga Dr Ros Altmann, who specified many people who may need to access this funding in case of emergencies will find their cash is locked away and inaccessible to them.
Individuals concerned this will be an issue could consider seeking pension transfer advice in order to establish which financial products will be more suited to their needs.
The expert acknowledged saving for the future is important and should by no means be abandoned, but claimed the current structure means fewer people are willing to save and those that do suffer from poor value.
She explained older workers could find their savings are penalised when they become eligible for means tested benefits in retirement, which means they would have been better off spending their money, rather than preparing for retirement.
Alternatively, a wider range of pension transfer options could be considered in order to find choices that will not lead to these circumstances becoming a problem in the future.
Government emphasis on reform of the pensions system was criticised for failing to consider the advantages of various alternatives.
"It is time to recognise that pensions may be past their sell-by date and we should consider how we can make them fit better with people's lives," Dr Altmann remarked.
"Pensions are not the only savings vehicle worth having, yet government policy is currently focused almost exclusively on getting people into pension schemes. This is understandable, but not optimal," she continued.
Despite these claims, a recent survey from the Association of British Insurers found many people believe they feel more encouraged to save as a result of the introduction of the auto-enrolment initiative for workplace pension schemes, with 47 per cent of respondents asserting they will not opt out.
Ashall Glover Financial Services, pension transfer specialists
Posted by Jonathan Breen
