Osborne's Plan for Pension Poverty

George Osborne is in danger of single-handedly destroying the pensions industry.

First, the so called pension freedoms. I’m not sure his opposite numbers in the DWP knew it was coming. Definitely his initiative- and with unforeseen (or seen and discarded) consequences. By copying the Australian model, we are in danger of opening up the nation to ‘double dippers’ as Australia calls them. People that take their cash, miss-use it, or miss-calculate and end up dependent on the State to survive.

And now a consultation document considering scrapping tax relief on pensions. Throughout my 38 years in the pension industry, alongside company contributions, the one thing that ‘sells’ pensions to youngsters is the tax relief. If pensions get treated the same way as ISA’s, then ‘goodbye pensions’. The industry becomes a savings industry, and over time (with unforeseen consequences and/or an uncaring Government), people will find that they didn’t save enough and can’t live on what’s there in retirement.

Short term treasury gains are in danger of sending the next generation into retirement poverty.

Time Will Tell

"The pensions industry has had over a year to prepare for the changes- and it is encouraging some firms have risen to the challenge. But others seem to be failing to move with the times...."

So says our new Pensions Minister Ros Altmann.

It's all to do with time, not 'moving with the times'. Every provider want to move with the times in the sense of moving with the market. But a year is an incredibly small time to turnaround one of the biggest pension changes in a century. Better not to offer than to get it wrong, as, I fear, many will, either in product or pricing.

Well done to Friends Life for not cashing in cheaply, but in reviewing what is best, and the timescales needed to do so. It may be resources. It may be the merger with Aviva. But better not to go there than to offer the product and fail.

The Daily Mail sees it as a U turn. Maybe it's more like parking up in a layby and letting the market mature first.

David Cameron needs to be careful in warning of a crackdown on providers failing to offer the 'freedoms'. Time (again) will tell whether those that have rushed to market have got it right.