LV= has called for the government to make seeking financial advice before retirement compulsory in light of pension freedoms.
According to research by LV=, almost 500,000 people retire every year without seeking financial advice, and 41 per cent of people within five years of retirement don’t plan to take any financial advice before they leave work.
LV= said given the added complexity of the pension freedoms, people need to be better informed before they decide what to do. The insurer suggested an industry levy should be created to support a service that could provide guidance on all retirement income options, not just pensions.
Managing director of life and pensions at LV= Richard Rowney said the low take-up of advice is leading to a ‘mis-buying’ crisis among retirees.
“It’s essential that all consumers are able to access affordable, regulated advice but when people can’t, or don’t, take advice we believe guidance should be compulsory,” he said. “This would further inform retirees about their options and help them make the most of their money, so we fully support the introduction of a merged, one-shop money and pensions guidance body.”
In this year’s budget it was announced the Money Advice Service would be merged with the Pensions Advisory Service and Pension Wise. The Association of Professional Financial Advisers released a statement last week calling for a fair funding model for the new body.
LV= also released some statistics regarding current uptake of financial advice. Only one in five people currently take regulated financial advice. Nearly a quarter of people surveyed wouldn’t take advice because free guidance is enough. Anyone who does take advice and shops around for an annuity on average sees a 23 per cent increase in retirement income.
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