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Wiser – Mike Wilson tells of his personal experience of his free government appointment with Pension Wise

  • By Sue Whitbread
Mike Wilson

Tuesday morning, and the sun shining brightly, says Michael Wilson, Editor-in-Chief of IFA Magazine. Off, then, with a spring in my step to my local Citizens’ Advice Bureau for my free government appointment with my Pension Wise adviser.

Yes, I know I ought to have all the right answers readily under my own belt, but there’s no better way to find out what the rest of the world is experiencing than to try it out for yourself. Well, I was in for a few surprises.

For the avoidance of doubt, you’re not getting rid of me just yet. My pension plans are only one part of the financial armoury with which I intend to greet the next quarter of a century, and my purpose at the CAB was to learn how the flexible drawdown provisions could be harnessed to best effect. And how drawdown shaped up against other options, such as selling down other types of assets while my tax-sheltered pension assets continued to accrue.

Sign of the times

I was in the right place. Gone were the bun-haired, well-meaning small-town librarians who used to staff the CAB back in the days of yore, and in their place was a former divisional head of one of the country’s biggest fund management outfits. No, he didn’t tell me that until after the interview, when I gently wrung it out of him, so fair’s fair, his impartiality was total throughout. I, for my part, had declared my identity right at the beginning, because I’m not the mystery shopper type.

I’d been asked to bring in all the details of my (nine) pension plans, and to have some answers ready about my lifestyle and expenditures. Right away, he locked onto a rather good (8%-plus) guaranteed annuity that still attached to a pre-1986 with-profits policy, and was well worth keeping, he said. Lucky me.

His knowledge of the 25% tax free drawdown provision was helpful – I hadn’t known, for instance, that I could take the tax free lump in one go and then pay full marginal rate on any subsequent drawdowns if I arranged things correctly. And any queries I had about the obligation to transfer all my nine policies onto a drawdown platform were quickly answered. (Answer, apparently, no, although in my particular situation I could probably get a bigger overall tax exemption on a lump sum withdrawal if I did.)

More simplicity

And so on, and so on. As the CAB man explained, most of his daily work is for ‘ordinary’ people with pension pots of well below £50,000 who are terrified of an IFA fee structure that they fear could devour a tenth of their money.  And if the advisory sector had one major hurdle to overcome, he said, it was achieving more public clarity about fees.

Most of these people are seeking complete simplicity, he said, which is why consolidation is high on their agendas. They’re starting to understand that the annuity system is now a poor bet, but the reintroduction of equity risk only leaves them needing ongoing advice that didn’t used to apply when people could still get a 6.5% return for life, and no questions asked.

I pass these thoughts on for what they’re worth. Personally, I was impressed.


Starting this Month: Equities Special Coverage

This month’s IFA Magazine sees the start of an exciting new feature in which our expert contributors will be writing a series of regular reports on what’s hot and what’s not in the world of UK and global equities. Essential reading!

  • Ben Willis, Head of Research at Whitechurch Securities, takes an internationalist view of the opportunities around Brexit, and beyond.
  • Meanwhile Brian Tora, our resident market guru, takes an unsentimental look at the measures that we use to compare value. Does the yield gap mean as much as it used to? And where do current p/e levels point toward?

Please do write in and tell us what you’d like us to cover in this new feature. We’ll look forward to hearing from you.