Pension providers have hailed Chancellor George Osborne’s pension shake up saying it makes pensions the new rock and roll. John Fox, director of SIPP provider, Liberty SIPP, says: “These proposals finally give people ownership of their pensions. One of the biggest problems of all pension regimes to date is that people have felt that the moment they invest money, it stops being their money. It feels like they’re giving it away.
“These changes remove that major psychological hurdle in one fell swoop and I’d expect it to encourage more people to start saving for their futures. It’s empowering pension savers rather than patronising them. You could argue that what’s been unveiled today is a legalised form of pension liberation, which benefits the saver and generates a healthy lump of tax for the Exchequer.
“The Government is aware that new schemes are being created all the time to help people get their hands on their pension funds and appears to have thought, ‘to hell with it, let’s take a slice of the pie’. It’s no coincidence that this move by the Chancellor will give the economy a massive influx of cash prior to the General Election and also put a feel-good factor in many people’s step”.
Howeveer even Fox says that he is worried about people who do not act responsibly. He says: “I am, of course, worried about the ramifications for people who do not act responsibly and, as a result, may become dependent on the state in later retirement. Car dealers and travel agents will be rubbing their hands with glee. I suppose the Chancellor has accepted that, if people don’t start saving then we’re going down as an economy anyway, so let’s give them the benefit of the doubt. It’s better to have saved and lost than never to have saved at all. With these proposals, the Chancellor has almost made pensions the new rock n’ roll.”
Chartered accountants HW Fisher & Company
private client partner Jamie Morrison says: ““Eight years after the last tinkering with pensions, these changes are a significant simplification – and a welcome recognition that more people are able to take charge of their own pension saving. Britons are much more financially astute than they once were, and while saving for retirement often gets put to the bottom of people’s “to do” lists, giving them more freedom to choose how they take their retirement income is a powerful incentive to get more people involved. While drawdown has long been seen as complicated and reserved for the wealthy, these changes will help it become a genuine alternative to buying an annuity.”