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Pension changes: Boom or Bluff?

by: Martin Reynolds
  • 02/03/2015
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Pension changes: Boom or Bluff?
The new pension rules that will be introduced in less than two months are currently causing quite a stir in the market, and across the national press. I have seen plenty of headlines stating that there will be a mass exodus of monies from pension funds, with this new found wealth creating a new mini BTL boom.

Will this really happen?

Irwin Mitchell research published in March 2014 quoted an average pension pot of £30,000. Nearly one year on I cannot imagine this has increased much. Also a 2013 HSBC survey stated 56% of the UK population is not preparing adequately for later life. Whilst the implementation of auto enrolment may help, how will these facts be translated into the BTL uplift?

It will be interesting to watch how the general public reacts to the ability to take monies from their pension early, especially with some of it tax free as an added incentive. Many of our members are taking lots of enquiries from clients asking for more information and clarification on how it will all work. Once they have this information, how many though will actually want to take the plunge and withdraw some or all of their future retirement income?

We also need to be careful as an industry how we approach this. Any discussion on how to manage a client’s pension should only be undertaken by an adviser with the appropriate permissions.

Obviously, the actual BTL mortgage is the end action; the key will be how a client comes to the decision. The concern is that it could quite easily become the next ‘dinner party’ conversation and decisions are made without a full understanding of the pros and cons of how they use their retirement income.

Whilst not wishing to damper enthusiasm for a new market opportunity, I believe that we have to set realistic expectations. Let’s see what April brings.

Martin Reynolds is CEO of Simplybiz Mortgages


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