Recently a lot of my time has been given over to communicating the benefits and challenges that George Osborn’s Freedom of Pensions announcements suggest to UK savers, employers, and indeed the benefits industry.
One of the points that I have been driving home is that these proposals are something of a balancing act for The Chancellor.
On the one hand freeing-up access to pension funds from age 55 will make investing in a pension scheme much more attractive to many more people, and thus encourage greater savings for retirement. This is a good thing.
On the other hand, access to the complete fund of money will doubtless lead some savers to blow all their pension savings in the early years of retirement, and thus face a potentially impoverished retirement once the funds have dried up. This grouping will doubtless then have to rely on state support to survive.
It’s to be hoped that the former outweigh the latter - leading to a nation that is overall saving more for their collective old age. But it’s only an educated guess rather than a certainty.
This takes us to this item from Corporate Adviser Magazine which has just caught my eye, and makes for interesting reading in this debate:
Australia consults on annuity measures to stop pot depletion
As the reader will note, the suggestion based on the Australian experience is that many are running out of retirement funds far too early. Will that be replicated in the UK? Time will tell, but right now it will be interesting to see if the formal proposals for this huge legislation change next year make any allowances for this possibility.
Will keep you posted.
Best regards
Steve
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