Labour’s shadow financial secretary Cathy Jamieson has raised concerns over the “worrying” lack of evidence provided by the Government to support Chancellor George Osborne’s annuities overhaul.
The reforms, which will come into effect from April 2015, will allow anyone aged 55 or over to take their entire pension pot as cash without being hit with a 55 per cent tax charge. Instead, savers who choose to strip out their fund will be taxed at their marginal rate.
Yeserday, Money Marketing revealed Labour had tabled an amendment to the Finance Bill pressing for details of the evidence upon which the decision was based.
Speaking to Money Marketing, Jamieson says: “The lack of detailed evidence from the Government is extremely worrying. Our amendment asks the Government to publish their initial impact analysis.
“We are also concerned to ensure that people have all the information they need to make informed choices about their future. Free and impartial face-to-face guidance is what has been promised, but we still don’t know what form this will take or the exact cost – the Government has only set aside £20m for two years starting in 2015, with nothing to help those affected by the current changes.
“More worryingly, the Government says the guidance will be provided by the pensions industry, so there is a very real danger that the costs will be passed on to consumers. If this is the case, it won’t be free at all.”
Jamieson also warns the majority of people will not be able to afford to pay for regulated financial advice.
She says: “The Government have also said they expect guidance be a stepping stone to advice; however, advice, whilst it provides much greater protection, is also much more expensive, and will be more than many savers can afford.
“We support the idea of more flexibility for pensions; indeed, we called for reform of the annuities market because it was quite clear savers were not getting a fair deal.
“However, we need assurances from the Government that people will get the help they need to make the right decisions about their futures.”