Pensioners may be left feeling the pinch as new regulations which could see financial advisors charging up front fees could leave them feeling short-changed.
The new rules are intended to help pensioners. However, it could just end up being a hindrance, according to new research.
The financial advice, which can be given to pensioners by financial advisors, can be beneficial for some. However, savers who have less than £50,000 could find themselves priced out of the market and left with lower retirement funds.
Currently, a number of independent financial advisors, who have earned commission from helping others who have grown a larger pension pot, use that to subsidise assistance for those with smaller ones.
Speaking to This is Money, Bob Bullivant, Chief Executive of Annuity Direct, said: “There is a degree of cross subsidy between bigger and smaller funds at present. We have a policy of dealing with any size of fund, not least because the people with only a £20,000 fund may have a friend with a £200,000 fund.”
There is a growing concern amongst industry experts that advisors will move up the market and the poorest pensioners will be forced to pay fees between £500 and £1,000 for advice on a typical pension; and debt advice in general.
Pensioners are already struggling to cope with rising living costs without the additional fees of financial advice.
Research from LV, the leading insurance firm, found that the cost of living for pensioners has increased by a massive 33% since 2000. Food and drink costs have rocketed recently, costing an average of £1,411 annually for UK pensioners. The report also found that the cost of alcoholic drinks and Tobaccohas increased by 57% generally since 2000.
Matt Trott, LV’s Head of Annuities, stated:”Low interest rates and rising inflation has hit pensioners hard with the cost of living dramatically rising since 2000, resulting in pensioners having to significantly increase what they spend.”
There is a rising concern that a number of pensioners, in the coming year, will have to seek help and advice around debt management should they not be able to combat the cost increases.
