A Labour government should rapidly identify methods to protect savers in the aftermath of pensions freedoms, shadow employment minister Stephen Timms says.
Speaking at a Pensions Policy Institute debate alongside pensions minister Steve Webb and financial secretary to the Treasury David Gauke yesterday, Timms said he expects a new wave of issues after 6 April, including both individuals underestimating their own longevity and potential misselling.
He said: “We should advise people just to pause and reflect before they decide what to do with their pensions pot, when they’re able to do that.
“In terms of longevity, this has to be one of the central things that there will need to be a discussion about as part of the guidance, and of the numbers and how long people are going to live.
“I do hope that people can be encouraged through that exercise, to take at least a realistic view about how long this is likely to be and if we don’t do that then we will have a problem.
If installed as pensions minister post-election, Timms said he would demand a “rapid review” of whether the safeguards surrounding the reforms are adequate.
He added: “My serious view is that they are not, and a new government will need to move quite quickly to deal with that.”
Webb responded to the Labour concerns as “over-paternalistic”, and accused Timms of targeting “undisciplined” decumulators.
He said: “The decumulation phrase is very different. They have a pot of money, are buying a product and that is potentially complicated so we should give them guidance.
“That is the difference for me – we see it as people using their own money to choose what they want to do with. Lots of individual freedoms and people making their own choice looks undisciplined, but I can live with undisciplined.
“There is a sense that a future Labour government at each turn would just ratchet back the paternalism.”
Speaking to Money Marketing after the event, Webb added: “The shadow of over-paternalism is always at the door and there is an instinct to control and to regulate.
“And just at the point we are giving freedoms, of course we have to be on our guard, but we have to hold back from thinking we know what is best.”