NEXT week's autumn statement is unlikely to include more shocks on pensions.
But we could already be heading for the perfect storm. Complex changes in pension legislation will have tens of thousands of people, who are not experienced investors, looking for information on how best to channel their investments, at a time when the number of financial advisors in the market is decreasing.
The UK Government is so concerned it is rushing through legislation so that fraudsters claiming to be authorised to give guidance could face up to 51 weeks in jail in England and Wales.
Pensions are seen as an easy target as most people don't fully understand how they work. Scammers have been offering people the ability to take their pension tax free cash before age 55, which is against the rules and results in heavy tax penalties. You may never see the balance of the fund as it may become invested in unregulated, overseas, high-risk with high charges, or even bogus funds.
The Pensions Regulator has revamped its warnings of the possible dangers of transferring and of the need to be wary of cold-callers, unsolicited text messages, or websites with eye-watering claims.
In the last 18 months the Financial Conduct Authority (FCA) has issued a number of warnings about the underlying investments held in self-invested personal pensions (Sipps). These involve unregulated investments which go into higher-risk sectors which are more likely to fail, leading to some individuals losing their life savings.
Now we have new legislation from next April which will allow individuals to withdraw their entire pension pot, with 25 per cent available tax- free (the remainder will be subject to income tax at marginal rates). Recent research from Hargreaves Lansdown suggests up to 200,000 people (12 per cent of the total) could cash in their pensions. However will they understand the implications of such action?
But anyone seeking advice needs to be 100 per cent clear they are dealing with an FCA-registered financial adviser qualified to advise on the range of pension options. With the changes in how advisers are remunerated, as commission is no longer an option, be prepared to pay at least £1,000 for comprehensive advice from an IFA. This will be a barrier for people with smaller funds, which is why it's important they go to Citizens Advice and don't select something off the internet.
It is a real concern a large number of people could fall prey to poor advice and conmen in the months leading up to the change of legislation, a time when the system will be under significant pressure. Pension savers with little experience making personal investments can be quick to trust the person they approach for advice. Therefore, it's never been more important to know exactly who you are dealing with and what they're qualified to advise on - if it seems too good to be true, it probably is.
l Derek Stewart is managing director of chartered independent financial advisers SAM Wealth
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