As part of the 6 April pension reforms, which allowed savers over 55 greater access to their pension savings, the Financial Conduct Authority has made it mandatory for anyone with safeguarded benefits, such as guaranteed annuity rates, to get financial advice before making any changes.
Royal London said for clients with pension pots of at least £30,000, funding this advice has become a real issue.
“Customers are having problems finding an adviser offering advice on pension pots of this size and funding the cost of that advice,” said Phil Loney, chief executive of Royal London.
“So we are calling on the Government and the FCA to give immediate priority to delivering an advice regime that is affordable for these customers and commercially viable for advisers.”
Royal London said some guaranteed annuity rates can reach up to 11%, compared with current average rates of around 4%, so there is a real need for customers to discuss their decision to give up these benefits with an adviser before making their final decision.
“There are thousands of Royal London customers who have valuable guaranteed annuity rates. We estimate those benefits are worth over a £1bn per year if extrapolated across the population as a whole,” said Loney.
“However, many savers with medium sized pension pots are finding it hard to find advisers offering this form of advice. We also appreciate that advisers need to have an advice regime in place that is commercially viable.
“The only option is for the FCA or government to rise to the challenge and make advice on pension freedoms affordable for all customers,” he said.
