FSA gives advisers green light ahead of 2012

The Financial Services Authority has confirmed that the introduction of personal accounts in 2012 should not stop advisers recommending that an individual saves in the run up to 2012.

Within its latest newsletter issued earlier this week, the FSA give advisers the green light to continue recommending current savings vehicles when it said 'there should be no question of delaying saving until 2012.

Putting off saving would not be in the best interests of the individual.' FSA newsletter: FSA statement on the impact of personal accounts The whole purpose of personal accounts is to increase saving in the UK, but we cannot let their introduction paralyse the savings industry.

There are legitimate concerns among some advisers about the implications of giving advice to clients in the period before 2012.

This reassurance from the FSA confirms that it should be business as usual at the moment.

If we look at an example of a male age 40 who saves £1,000 per year and retires at 65.

Delaying saving for 5 years (until 2012 when personal accounts starts) means he would around two-thirds of the benefits he would if he started now.

Rather than have a pot of nearly £62,000, he would only have around £41,000*.

This illustrates the importance of starting to save as early as possible.

Andrew Tully, Marketing Technical Manager at Standard Life said: 'This is a welcome clarification from the FSA and is good news for advisers.

The key to achieving a decent retirement income is to start saving as early as possible.

The longer people leave it before they start, the worse the situation will get.

Delaying saving for five years could reduce benefits by one-third for a 40 year old who aims to retire at age 65.' * Assumes a 6% investment return after charges.

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