There is a sense of panic spreading like wildfire through the Treasury, via the Chancellor, and onto Westminster, as the reality of the ambitious pension reforms package George Osborne announced nine months ago, hits home.
The promise to end the outdated and oppressive pension regime which forced savers into under-performing annuities with excessive charges, as well as the promise of 100% access as and when required, the abolishment of the 55% death tax, and the ban on transfers for public sector unfunded defined benefit schemes, have all taken their toll on what was an already disorganised and chaotic industry.
Now it would appear that the UK’s main pension providers are fearful of what to expect in April. With only 12 months to prepare for the largest pension reforms in more than a century, some providers expect pandemonium as an unknown and unpredictable number of savers demand the withdrawal of their pension in its entirety. Providers aren’t ready for this.
A Rush & a Push
The whole process of implementation has been rushed, and amid the concerns over allowing 100% access. And the way such large lump sums may be used or wasted, the FCA has rushed through extra safeguards to try to ensure that advice is given to anyone deciding that the pension market simply isn’t for them any longer.
Regardless of the legislation, savers are likely to find the majority of pension providers simply won’t be in a position to offer 100% access in time for April 2015.
For such huge and potentially hard-to-implement reforms to be introduced so close to a General Election is one of the more strange decisions from George Osborne, who will most likely be relieved of his place in Downing Street if current opinion polls are to be believed. If Labour take back No. 10, as part of a coalition or not, will they reverse some of the pension reforms? They weren’t exactly forthcoming initially in their support for the legislation amendments at the time……