The Government’s focus on how easily savers will be able to access their pensions risks undermining the aims of the auto-enrolment and the Budget reforms, ABI director general Otto Thoresen warns.
Earlier today the Chancellor George Osborne confirmed savers will be able to take multiple chunks out of their pensions in April once they reach 55.
But Thoresen warns the media focus on early access means the key purpose of the Budget reforms – to boost flexibility and choice – could be “lost under a weight of rhetoric”.
He says: “Automatic enrolment has seen millions more people saving for their retirement – we should be building on this success to increase their resilience in older age, not threatening this early success by breaking the link between saving and retirement completely.”
Thoresen also predicts neither the Government-backed guidance guarantee nor the FCA will be able to stop savers making poor decisions when using uncrystallised funds pension lump sums or flexi-access drawdown to take their pensions from next April.
He says: “The risk to savers of making decisions without the necessary information, or the potential for scammers to become active in this market, is clear. But the prospects of the Government’s guidance guarantee being able to cover the gap, or the FCA being able to develop appropriate safeguards in time for next April, are virtually nil.”