Lib Dem Voice has polled our members-only forum to discover what Lib Dem members think of various political issues, the Coalition, and the performance of key party figures. Over 830 party members responded – thank you – and we’re publishing the full results.
Do you support or oppose abolishing the requirement for people to buy an annuity with their pension fund, and making it easier for pensioners to take part of their pension pot as a lump sum?
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Support – 78%
Oppose – 9%
Don’t know – 13%
Steve Webb is a Lib Dem hero if the findings of our recent party members’ survey is anything to go by. He topped our poll of top-performing ministers, knocking Vince Cable off his perch for the first time in three years.
And a big reason why is clear from this result: Steve’s proposal (announced in the last Budget) to abolish the requirement for people to buy an annuity with their pension fund, making it easier for pensioners to take part of their pension pot as a lump sum, has won acclaim within the party. More than three-quarters support the move, with only 9% opposed. Here’s a sample of your comments…
• There is a real and tangible risk that people will be left without an income in retirement and thus become more dependent on the State. There is also a significant risk that people will get poor advice, and those who choose not to take the annuity will end up out of pocket. This has been the position of governments for years, and I just don’t understand the logic of this decision.
• But the annuity providing companies needs serious regulation
• It is as absurd to believe that allowing pensioners to use their pension pots more or less as they want to at or near retirement will prevent people being ‘ripped off’ as is the belief that most people’s pensions will support them comfortably in retirement. This measure has only been introduced to get the money into circulation.
• The annuities market too often offers poor or very poor value for people with modest pensions. Much tighter regulation is required. It is not right to expose people who have a generally inadequate grasp of the financial markets in a position where they are tempted to ‘gamble’ their hard-earned savings
• we need a compulsory universal pension scheme so that people can rely on getting a decent pension which won’t be sucked into some financial profit-motivated company. Then people won’t need to buy property to let in order to get security in later life.
• Annuities were uncompetitive, they were far too profitable for the companies running them, that is why those companies share value fell. They should be a shared form of insurance not another way to fleece savers. The growth in pension pots is far too small, some are paying less than people have put in while the managers are on 6 figure salaries plus bonuses.
• Another brilliant piece of work by Steve Webb! Only practicable after he got the flat-rate state pension in place – and backed up by the new compulsory workplace pension schemes. This man deserves a knighthood at least- a real strategic thinker – and his lack of interest in being our Party Leader proves him to be an ideal candidate for that post. What a contrast with the dim incompetence of his Coalition boss, IDS!
• I have a small annuity and it would provide a tiny pension. I prefer to invest it in a more sensible way.
• Free choice.
• Steve Webb a star..the next Leader please!
• But need reform housing to help first time buyers not wealthy pensioners
• Brilliant idea. Trust the people
• The jury is out. I am concerned however that this change will eventually lead to pensions becoming just another kind of savings account and taxed accordingly.
• I am worried about the long-term implications of this move – what will the pensioners live on once they have spent all of their pension pot?
• Because pension funds are being dissipated by huge costs imposed by insurance companies, and current annuity rates are simply too low.
• I think it would be more appropriate to allow a certain amount of a person’s pension fund to be taken as a lump sum, say £150,000, for example. Allowing 100% turns it into a tax free savings scheme instead of a pension. Avoiding 40% income tax by putting it into a pension scheme is jolly nice for those with a high income but it just looks like a tax dodge.
• Pensions should support people in their old age. Given the corruption in the finance industry and the impossibility for ordinary people of getting reliable advice, I think tat the government should take over all pensions, before they have to rescue starving pensioners who have been cheated out of their money
• I support it, provided that the right to advice is a right to real advice. The money earmarked so far is ridiculously low.
• Freedom of choice. Freedom of timing.
• annuties poor reward at present. Not much point in pensions that are used up before retirement age
• This should have been the subject of a proper consultation, as we now have unexpected consequences of a rushed and botched implementation
• Long overdue sensible reform of system
• It was a clever proposal and will get support, can’t say if its good or not
• Our party is founded on the importance of individual freedom. Annuity legislation denies us control over our savings and retirement spending options.y
• I am worried that people will spend quickly, and then be more of a burden on the state.
• Fundamentally liberal!
• Choice is vital
• I seem to remember this being in our 2010 manifesto, more or less.
* Stephen was Editor (and Co-Editor) of Liberal Democrat Voice from 2007 to 2015, and writes at The Collected Stephen Tall.
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8 Comments
All good stuff but sadly this positive message does not seem to be getting to the public at large. Plus too many times the message of the long list of conservative policies that the liberal democrats have prevented is getting through – but as a negative message not a positive one. I sincerely hope this South African PR guru can help to turn things round and get the stronger messsage across of why it it is a positive action to vote liberal democrat and forget about all the other parties.
If people aren’t required to take an annuity then why should there be any tax relief on pensions? Presumably the tax relief is there because these people are being self-reliant and are less likely to require the help of the state in their old age. So know they can avoid tax on their income, then pick up a juicy pension pot when they retire, blow the money as they wish and then get the state to pay to look after them in their old age. Pensions just seem to be becoming a cheeky way to give (generally speaking) the better off a tax break which if done openly would provoke howls of unfairness.
I’ve pointed this out before, but it’s worth repeating.
Unlocking someone’s pension pot so they can make decisions on how to use it is to be applauded. But of course, a government with ‘sticky fingers’ now, also has access to your newly unlocked pension pot. Another pot of money for the government to dip into, for your elderly health care, alongside the equity in your home? In short : Has this pot of money been unlocked for your benefit, or the governments benefit?
John Dunn – Not getting at you.
Sorry, you seem to suggest that people should not be required to look to the capital value of their housing assets to fund themselves in old age? Why not?
I would suggest that it is absolutely right that granny starts to look to her own assets. Sure, we can have a debate about tax levels. However I see no reason why house price wealth (or for that matter any illiquid asset) should be seen as special.
@Frank Booth
Under the new rules money taken out of a pension pot will be taxed regardless of whether it is taken as a lump sum or as an annuity, so no change in that respect to the current arrangements – hence no change to the validity of giving tax relief on pension contributions.
@John Dunn
I agree the government wouldn’t of passed these changes if there wasn’t something in it for them. I suspect the first ‘take’ will be within the next ten years – when the government will be looking for further savings, and hence is likely to deem that any one with a pension pot which they could access if they took early retirement (ie. practically any one over 55) is not entitled to benefits etc. A second group who will be very interested in this will be the mortgage companies, as I suspect many will reach retirement and not paid off their mortgage – given the potential sums of money involved tax will also be incurred…
@Little Jackie Paper
I suggest you get some hands on experience with retired people and gaining access to the capital value of their housing asset. Yes there are some who have done well – brought low and sold high and then moved to somewhere very cheap; but for the many things aren’t quite so rosy. However, I suspect that in the coming decades the picture will be very different with relatively few people either actually owning their house outright upon retirement.
Roland – I think you misunderstand me. It may be easy or not to get capital out of (say) a house. My question was WHY the earlier comment appeared to think that houses were somehow, ‘different.’ My contention is that house price wealth is not special.
If the difficulty of making the asset liquid is your concern that’s fair enough and more perhaps could be done on that by government. But my point was the principle that houses are not, ‘special’ and that granny should look to her own assets in austere times.
Unless of course you think that house price wealth isn’t real wealth?
Clegg out,Charles or Tim in.
Little Jackie Paper – Is house price wealth real or special?
A good question. I think house wealth is certainly different to monetary wealth (ie. wealth held in bank accounts and conventional investments), because in part the true wealth cannot be determined until it has been sold and the person has purchased somewhere else to live. I think that in discussing house price wealth we should avoid the standard rhetoric that assumes that all old people live in large houses and could very easily downsize and realise a big profit and instead focus on the more typical cases where people are already living in more modest accommodation.
But what John was alluding to was that government, particularly one that is even more financially constrained than the current one, will be looking at every opportunity it can to avoid paying out money today, even if it’s actions are likely to result in increase expenditure tomorrow.