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.”