QUESTIONS are being raised about whether pensioners will get the right type of help and support they need from next April when new rules allow them to take all their cash out of their pension.
One pension expert has predicted that it will take five years before a foolproof guidance system is in place.
This week the Chancellor put more flesh on the bones of his surprise announcement in this year's Budget that pensioners would get guaranteed free and impartial guidance as well as access to their cash.
The role of providing the guidance is being given to the Money Advice Service (MAS) and The Pension Advice Service. Guidance will be available through a number of channels - online, over the phone, or face to face. Individuals will be able to choose the channel, or mix of channels, they find most convenient.
There has been a general welcome for the fact that pension providers will not be entrusted with the job.
However, questions are being asked about the logistics of having enough qualified people available and the competency of the government-backed MAS to provide consumers with the guidance they will need.
Andrew Tyrie, Conservative MP and chairman of the Treasury Committee at Westminster, said "It is concerning... that the MAS may play a part in the delivery of the guidance.
"The committee has expressed serious concerns about the ability of the MAS to perform its functions, and has recommended that an independent review consider whether the MAS should exist at all as a statutory body."
Independent pension expert Ros Altmann, recently appointed by the government as its new business champion for older workers, said: "I don't think MAS is up to the job.
"It needs a completely different approach.
"But I am optimistic that it can change."
David Trenner, technical director at Intelligent Pensions in Glasgow, believes that implementing the new regime will take time.
"Ideally before making such a radical change, the Chancellor would have made sure that the right system of advice was in place first," he said.
"But it would never have happened that way.
"So I think we will see a developing situation after April 2015, both in terms of guidance and the options available to people.
"It could take five years until a mature guidance regime and lots of available solutions are in place."
One of the problems is people's low awareness of their current pension.
Robert Reid of financial advisers Syndaxi said: "If individuals are going to make the most of the guidance, they will need to know about their current pension position."
Mr Reid, who has been involved in providing pension advice through Citizens Advice in the past, said one of his first jobs was often explaining to people what they had already got.
He also says advice to those with the smallest savings is often more complicated and time-consuming than advice for the affluent.
Multiple pension pots are also the norm, points out Perth-based adviser Douglas Baillie.
He said: "From our experience the average is 3.2 pensions.
"People move jobs - they know where they have worked but they don't necessarily know what type of pensions they have.
"It is a complex area."
Mr Baillie is currently working on a revamp of his website, Comparemypension.com, which is due to relaunch in October, in consultation with the financial regulators.
It will provide free information about pensions.
People can then use this information to take action or use links to contact other qualified advisers.
Dr Altmann points out that people will be entitled to one session of guidance for each of their pensions, not one per person.
She blames the pensions industry for people's ignorance about their existing provision.
She said: "The industry has not looked after its customers."
There are concerns about whether guidance will be enough for many people.
John Mortimer of Shephered and Wedderburn Financial in Edinburgh said: "Relying on generic guidance alone could lead to some very ill informed decisions."
Dr Altmann added: "It is crucial that people understand the difference between guidance and advice.
"The guidance that people will be offered will help them ask the right questions and tell them their options.
"But if people want advice to help them find the right answer they will have to pay for it."
Robert Reid believes group advice, funded by employers would help.
However, if this is to work, he said "the government needs to increase the amount that employers can spend per person on providing this advice without it being taxed as a benefit-in-kind".
It is uncertain how people will react to their newfound pension freedom next April.
Dr Altmann is optimistic that "the guidance should stop people making bad decisions like buying annuities that are not right for them".
Mr Reid believes the Chancellor is expecting a revenue boost from the income tax people will have to pay on the cash taken out of their pension pots in excess of the tax free lump sum.
He believes it will make sense for people with small pots to take it in cash.
Mr Reid added: "For anyone with less than £20,000 in their pension pot, it is probably a sensible decision to take the cash.
"For others it will depend on their circumstances.
"Many are likely to opt for drawing down an income from their pension funds."