Confusing and complex pension options need clarifying, says NAPF

An organisation which represents schemes providing pensions for over 17 million people has labelled the new options for retirees arising from the Budget reforms as "baffling". Even after the much debated guidance service comes into effect, many members will find it a struggle to make the right choice for them when the changes take effect next April, says The National Association of Pension Funds.The body has signalled the warning as part of a response to the Taxation of Pensions Bill, which was discussed in the House of Commons on Tuesday.The draft legislation sets out the proposed changes to the pensions tax rules coming from the Budget that will give people greater flexibility to access their pension savings.Graham Vidler, director of external affairs at the NAPF, said: "The key to making these reforms to pensions taxation a success is keeping them as simple as possible for pension savers to understand and for schemes to implement."Pension schemes will need to clearly explain the new choices open to members."But even with the help of guidance, many scheme members will find the options available to them from age 55 baffling and will struggle to select an appropriate mechanism for turning their pot into an income. {desktop}{/desktop}{mobile}{/mobile} "Some 30% of respondents to our 2014 Spring Workplace Survey said they did not feel capable of deciding what to do with their pension savings and even less (14%) felt they would need no guidance at all on what to do with their savings."We would urge the Treasury and guidance guarantee providers to work with the NAPF to develop simpler ways of communicating the complex options for members."Mr Vidler said: "Pension schemes can potentially help their members decide how best to access their pension savings by using their expertise to highlight options that are good value."Schemes sifting the market and nudging members towards sensible decumulation strategies will help unengaged pension savers take advantage of the freedoms and choices being offered by the Government."This is a development that should be encouraged by Government within schemes that have robust governance arrangements that ensure they are acting in their members' interests."

Confusing and complex pension options need clarifying, says NAPF

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