What will pension reform cost you?

Pensions freedom sounds easy. But as Merryn Somerset Webb explains, the reality isn't quite so simple.

Pensions freedom sounds easy. You have a pension. You want to cash some of it in under the new pension reforms. You tell your provider. They send a cheque. Job done. But it doesn't usually work quite like that.

There's always administration, and maybe hefty costs too. Some 500,000 people who took out pensions in the 1980s, 1990s and early 2000s face "early encashment penalties" if they take their money before they are 65, says The Sunday Telegraph. To see why, we need to look back to pre-Retail Distribution Review (RDR) days, when the financial industry made most of its money via commission.

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Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.