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Consumer expectations on pension freedom have not been managed


Matt Phillips, Managing Director, Thomas Miller Investment is concerned that consumer expectation around the April pension freedoms have not been managed. He says: “A pension is not to be used like a cash account and if that’s how consumers thought the pension freedoms would work then they were very mistaken.”

Phillips continues: “There have been headlines labelling the pension reforms as a pension shambles, even stating the freedoms will be a mis-selling scandal. People have not been able to access their funds or feel they are being charged too much money to do so which asks the question, what are people’s expectations?”
Phillips believes that everyone wants transparent and reasonable charging. “So if you want to take cash out of your pension, you should be able to do so and at a reasonable charge. Right now, pension providers are understandably catching up with the pension’s freedoms and how they are administered. This means that taking out small amounts now, like you would a cash account, just isn't viable and is proving extremely costly.”
Going forwards, Phillips believes, providers will, if there is a demand for this type of flexibility, come up with a product that will be enable people to do this while still benefiting from all of the tax benefits and allowing the access people want. 
“However,” he warns, “for the time being this is not an option. Many have argued that pensions are not like bank accounts and should not be treated as such.  That is currently a theoretical debate because clearly the pensions industry is still catching up. Pension freedoms is the first and most important step to getting the sort of flexibility that we believe makes pensions what they should be; just another pot into which we can save. Thankfully, we are living longer and healthier lives but this is going to have to be paid for and taking control of our savings and saving more, along with good advice, is the most obvious answer.”

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