There are concerns that the pension reforms which came into effect in April 2015 could lead to an increase in pensions advice professional negligence claims, with this prospect causing considerable anxiety among the financial advice community.
Unfortunately, despite the fact that reforms were designed to give people more freedom and flexibility with their pensions, there is plenty of evidence to suggest that pension providers are failing to allow this to happen.
For example, it was hoped that many retirees would effectively be able to use their pension funds like a bank account by allowing them to make withdrawals; however, many providers and advisors are fearful that allowing this to happen could open them up to pensions advice professional negligence claims in the future, while others are charging “punitive” withdrawal fees.
Those frustrated by this reticence have faced further problems in trying to change providers as this can attract large transfer fees.
“An adviser will consider lifestyle and health factors that could enable the retiree to qualify for an enhancement and can therefore guarantee that they receive the best annuity rate available,” said Scott Mullen of My Pension Expert.
“They will also offer advice on the taxation of withdrawals, making sure that the retiree pays as little as possible and at the same time is fully aware of the longevity risks of depleting a pension fund.”
However, for many of the retirees who’ve been refused the ability to withdraw funds because of advisor fears of pensions advice professional negligence claims, the words of such experts are unlikely to provide much comfort.
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