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UK Consumer Panel fears risks for savers after budget annuity shock
| Published: | 22 Apr at 6 PM |
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Tagged: Pension Transfer
When the Consumer Panel published its damning report on annuity sales at the end of last year, no-one expected reform to arrive as early as the March 2014 budget.
However, now that the dust is beginning to settle, the Panel is concerned over risks for consumers at home and abroad once the market is flooded with new, flexible financial products. The panel’s chairwoman, Sue Lewis, argues that providers of annuities will be searching for other ways to claw back the millions in lost income resulting from the Chancellor’s action.
Lewis has said she welcomes the reforms in general, but is also expressing concerns that investors may not understand what they are purchasing, leaving the door wide open for even more mis-selling. Her concerns are also aimed at the government’s stated intent that free, face-to-face impartial advice is to be given to all those holding defined contribution pension plans.
A consultation document published following the budget speech stated that guidance, rather than advice, would be offered and given before the 12-month deadline ending in March 2015. The scope of the service is now in doubt, with concern growing amongst experts and other consumer groups.
According to Lewis, it’s essential that guidance given as a free service is provided with the best interests of consumers in mind, as otherwise the reforms are unlikely to be successful. The government, she believes, needs to rethink its face-to-face programme and focus on the most cost-effective means of giving pension savers an overview of what’s likely to be on offer.
However, now that the dust is beginning to settle, the Panel is concerned over risks for consumers at home and abroad once the market is flooded with new, flexible financial products. The panel’s chairwoman, Sue Lewis, argues that providers of annuities will be searching for other ways to claw back the millions in lost income resulting from the Chancellor’s action.
Lewis has said she welcomes the reforms in general, but is also expressing concerns that investors may not understand what they are purchasing, leaving the door wide open for even more mis-selling. Her concerns are also aimed at the government’s stated intent that free, face-to-face impartial advice is to be given to all those holding defined contribution pension plans.
A consultation document published following the budget speech stated that guidance, rather than advice, would be offered and given before the 12-month deadline ending in March 2015. The scope of the service is now in doubt, with concern growing amongst experts and other consumer groups.
According to Lewis, it’s essential that guidance given as a free service is provided with the best interests of consumers in mind, as otherwise the reforms are unlikely to be successful. The government, she believes, needs to rethink its face-to-face programme and focus on the most cost-effective means of giving pension savers an overview of what’s likely to be on offer.
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