Care is needed to avoid the Chancellor’s extension of flexibility and freedom being at the expense of a long term loss. Comment from Kevin Legrand, Head of Pensions Policy, Buck Consultants at Xerox.
The common aim must be to assist vulnerable pensioners and employees in making sensible decisions throughout their working lives and beyond;
there is a key role for the pensions industry and employers, working together, to help today’s pensioners and older employees. Kevin LegrandCommenting on the Chancellor’s Budget announcement that five million people who have already bought an annuity will now be able to cash it in: “Care is needed to avoid these new flexibilities being a short term gain at the expense of a long term loss. The extension of freedoms needs an effective life support system. The common aim must be to assist vulnerable pensioners and employees in making sensible decisions throughout their working lives and beyond.
“A challenge will be to ensure that there is a robust guidance and advice regime, of similar weight to the one protecting transfers above £30K from DB to DC schemes, to protect pensioners. There is also a key role for the pensions industry and employers, working together to help, in particular, today’s pensioners and older employees. There are many potential media, from simplified products and clearer rules, to workplace support, developing and deploying interactive member-focused tools such as retirement modellers incorporating all of an individual’s assets. The proposals will no doubt focus concerns around the problem of low levels of financial knowledge generally, and of pensions in particular. There is much to be done to improve that, but it is a long-term project.”
“The pension freedoms give those nearing retirement – and now those who have already bought an annuity – the chance to make their own decisions. It empowers individuals to choose how they want use their retirement savings, something we’ve never had before. However, the removal of restrictions on buying and selling existing annuities could expose yet further people to pension scammers, unless, for instance, the buy-back is restricted to insurance companies. It could also leave people being hit with charges or worse, poorer retirement savings than they had before, by cashing in and making a poor selection without the proper advice.”
