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Mick McAteer: EU shouldn’t follow pension freedoms ‘disaster’

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The Financial Inclusion Centre director Mick McAteer has urged the European pensions industry not to follow the UK on its “disaster” pension freedoms reforms.

McAteer, a former FCA board member, argued against pension freedoms at an EU Commission hearing on personal pensions in Brussels this week.

Speaking to Money Marketing after the hearing, McAteer says: “UK pension freedom and choice reforms were a disaster. I would advise the rest of Europe not to follow the UK on this. People should always look at the UK to learn how not to do stuff.

“Consumers would be exposed to more longevity risk, more market and misselling risk and more scams. It will push up the costs for saving for retirement as well. We think the freedom and choice will just add more advice, distribution and product design costs into the pension system.”

But Royal London director of policy and former pensions minister Steve Webb says pensions freedoms are about “trusting people with their own money” and that people had been “extraordinarily sensible” with their pots since April 2016.

He says: “If we are not prepared to [trust people with their money] then we might just give up. Rather than pensions having been dry and dull with the Government telling you what to do, you now tend to choose, so if you want an annuity you can still buy an annuity.”

Hargreaves Lansdown senior pension analyst Nathan Long says access to quality information and advice remains crucial for the continued success of the pension freedoms as opposed to product innovation.

He says: “New products are not necessary to make sensible post-pension freedom decisions. For many a combination of annuity and income drawdown can provide the necessary balance between income security and flexibility to suit their own personal circumstances.”

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Comments

There are 7 comments at the moment, we would love to hear your opinion too.

  1. Freedom & Choice in Retirement 26th October 2016 at 4:10 pm

    Mick has done some great work over the years, however he’s wrong on this one.

    We see first hand the positive outcomes that are possible because of the new rules. Individuals debt free for the first time in their adult lives, others avoiding court judgements or keeping their homes and proud parents seeing their children buy their first home.

    This is the best thing to happen to pensions in my thirty year career. With freedom & choice comes responsibility and that is the challenge. Hopefully our regulator can help by making advice more accessible, enabling those that have saved to make sensible, balanced decisions.

  2. Personally, I think Mick McAteer should get back to Russia.

    He says that freedom of choice has been “a disaster”, but as justification he points only at the risk that bad things might happen, not at any concrete evidence that bad things are happening to any great degree.

    Pension Freedoms have been a great success in giving people (heaven forbid) access to their own money. “Exposing them to longevity risk” for example translates as “People with a £30k plot are no longer restricted to 15 quid a week in case they don’t die soon”.

    No. If Mick McAteer wants to talk to foreign governments like the EU commission, I suggest he stays there (now we’re leaving).

  3. Absolutely, Pension Freedoms have given saving for retirement a much needed breath of fresh air. In the current low interest rate environment annuities only offer value for the insurers. We need to encourage people to save for their retirement and having complete flexibility on how benefits are vested is only a step in the right direction. Less of the Nanny state, it is our money after all.

  4. Agreed with previous post re freedoms. But disagree with good work done by MM, he just stirs things up when it’s not necessary.

  5. Not for the first time is Mick bang on the money. Pension freedoms are a disaster for pension holders, but a golden egg for advisers and providers. No wonder Webb & HL are all for them.

    “Trusting people with their own money”

    Oh please! The average person is so trustworthy with money that 31% of all adults (approx. 15 million people) have less than £1,000 saved. The average pension pot is £30k. The average household debt (excluding mortgage) is £13,520. 25% of families have no savings at all. And remember the UK is the most indebted nation in the world – bar none. And Mr Webb wants to trust people with their own money. What money?

  6. There is no disaster. I believe this article has got it totally wrong

  7. For all the people for whom cashing in their pension funds/benefits may have helped in the short term, there are at least as many, quite possibly many more, who’ve acted in foolish haste and who will repent at leisure for the rest of their income-starved lives. Whilst I accept that the imposition of GAD rates on Income DD was overly prescriptive, I don’t think it’s been a good move simply to discard all and any limits because way too many people who really don’t appreciate the long term implications of grabbing the lot (or what’s left of it after the tax man’s had his cut) all in one go will simply act in a short sighted and irresponsible manner.

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