A financial adviser has raised concerns over government plans to send people looking for help with new pension rules to a charity staffed by volunteers.
Face-to-face advice will be offered to potential retirees at Citizens Advice bureaux of across the UK, Chancellor George Osborne said.
The Pensions Advisory Service will also provide free and impartial advice over the telephone.
The new rules make it easier for people to dip into their pension pots when they want, and to leave their unused pension funds to others, at potentially lower rates of tax.
The services will come in from April – however, financial advisers have already raised concerns about whether Citizens Advice volunteers have the level of expertise required.
Allan Gardner, Financial Services Director at Aberdein Considine, believes the move is a “cop out” by the coalition on its free advice guarantee.
“They have gone for the cheapest solution rather than the best solution – which is unacceptable when so much is at stake,” he said.
“I have the greatest of respect for the people involved at the Citizen’s Advice centres – but I find it hard to believe they will be provided with sufficient training to give anything other than the most basic of free guidance. Nobody seems to want to say what happens next.
“The most logical step is that the client who wants or needs to do something further will need to speak to a fully qualified independent financial adviser who actually has experience in offering advice on all of the options that are available when someone looks to draw pension benefits.
“The real guidance is assessing investment risk, tax implications, cash flow modelling and cost for an individual and then managing the money where needed.
“In many complex cases, the Citizens Advice people will recommend their client sees an adviser – I don’t really get why the government isn’t sending people there in the first place.”
Citizens Advice chief executive Gillian Guy, however, believes the service can meet the challenge.
“People who have diligently saved year after year towards their retirement deserve to choose how to make the most of their pension pot and good guidance is central to helping people make the right decisions for them,” she said.
“As a trusted, independent charity, Citizens Advice is in a unique position to deliver face to face pensions guidance. We have 75 years’ experience working at the heart of communities, helping people get to grips with their finances. It’s a natural fit for us to help people understand their pension options and make choices for their future.”
Under the reforms people aged over 55 will be able to take their pension pot subject to their marginal rate of income tax in that year, rather than the current situation where they are charged 55% tax if they withdraw the whole pot.
They will also be able to use their pension pot like a bank account and withdraw a series of lump sums, with 25% of each slice being tax-free.
Mr Osborne believes the changes will give people responsibility for their nest eggs, but critics fear people could squander their savings.