Strong backing for Steve Webb’s pension reforms: 78% of Lib Dems support abolishing annuity requirement
by Stephen Tall on May 21, 2014
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?
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 Tall is Co-Editor of Liberal Democrat Voice, and editor of the 2013 publication, The Coalition and Beyond: Liberal Reforms for the Decade Ahead. He is also a Research Associate for the liberal think-tank CentreForum and writes at his own site, The Collected Stephen Tall.