One of Britain’s biggest pension providers is making a mockery of flexible access by blocking access to retirement savings.
Aegon serves millions of customers around the world and controls billions of pounds of pension cash.
But savers trying to exercise their rights to take their money out of their funds and spend the cash as they wish have been told they can only do so if they have paid for independent financial advice.
Despite the government offering a Pension Wise service offering the advice for free, Aegon expects retirement savers to pay an average £3,000 each before they can get their cash.
The firm has told customers they will have flexible access from April 2016 as the firm has cancelled plans to offer flexible access this year.
Expensive options
Instead, retirement savers who cannot pay for financial advice have three choices:
- Withdraw all their pension cash and face the tax consequences
- Buy a poor performing lifetime annuity with their pension fund
- Lose money from their fund by transferring to another provider offering flexible access now
Aegon is not the only large pension provider not to offer flexible access – earlier in the summer Friends Life faltered and announced the new pension freedoms would be put on hold for their customers for now.
“Making decisions about what to do with pension cash are complicated,” said an Aegon spokesman.
“We feel our customers need to consider how much they take, when they withdraw the cash and the best way to invest the money so they do not run out of money during their retirement.
Minister’s criticism
“We are still considering what to offer under pension freedoms and will launch a service which we feel meets the needs of our customers in due course.”
Pensions minister Ros Altmann said she was disappointed that some providers could not offer customers full access to their money under pension freedoms.
“These firms are not moving with the times or delivering what their customers want,” she said.
Flexible access to retirement savings in pension funds was introduced for the over 55s in April this year.
The new rules allow retirement savers to take money from their pensions to spend how they wish, but several providers have had problems implementing the payment systems.
