A switch to a system called “Retail Distribution Review” where financial advisers must charge upfront fees could bring problems for savers – with the advice on how you convert your pension into a pension income will be given to only those who can afford it.
Everyone who has saved into a personal pension or into certain types of company scheme must use their fund to buy an annuity that will pay an income for life when they retire. Presently, some independent advisers use commissions earned from helping those who have bigger pension pots to subsidise their help and assistance for those with smaller pension pots.
However, the Nationwide building society launched an annuity-finding service in March earlier this year, via it’s branch network. The service is open to those with a fund of no less than: £18,000.
However, some say that the “Retail Distribution Review” which comes into force in 2013, will bring big problems for savers.
The “Retail Distribution Review” dreamed up by the Financial Services Authority, will see advisers forced to agree upfront fees with their customers. But given this, who will be willing to pay fees of between £500.00-£1,000.00 for pensions advice? So those with big pension funds will get excellent advice whilst those with smaller pensions get hardly any advice at all.
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