Consumer Panel welcomes greater choice in pensions
19 March 2014
The Panel welcomes the Chancellor’s announcement in the Budget today on the liberalisation of pensions.
In December 2013 the Panel published annuities research which showed that the market does not work well for consumers, and recommended that the Government should amend the tax rules that prevent those with several small pension pots from taking their pension as a lump sum. The Panel is pleased to see that the Government has increased the amount that can be taken as cash from £18,000 to £30,000.
The Panel also welcomes the increase in the size of pension pot that can be taken as a lump sum regardless of total pension wealth from £2,000 to £10,000, and the increase in the number of pension pots that can be taken as a lump sum under the “small pot” rules from two to three. This means that people will be able to take up to £30,000 in cash, even if they have other pension savings.
We also support the introduction of face-to-face guidance at retirement and the prospect of more pension flexibility to come.
Sue Lewis, Consumer Panel Chair, said:
“The Panel is delighted that the Government has acted on the treatment of small pension pots and the introduction of free face-to-face guidance.
We look forward to responding to the consultation on a more radical overhaul of the pensions system. The proposal for everyone to have the right to free and impartial face-to-face guidance at the point of retirement is particularly welcome. This would really help people make an informed choice about their options for retirement income.
We would, however sound a note of caution about the post 2015 pensions world. Any new income generation products that emerge need to serve consumers well and affordably, particularly those with small ports. There will be no point in going from the annuities frying pan to a drawdown fire.”
Notes to editors
- The Consumer Panel is a statutory body under the Financial Services Act 2012. It was initially established by the Financial Servicse Authority in December 1998. The panel advises the FCA on the interests and concerns of consumers.
- The Panel's membership is drawn from a broad range of backgrounds with expertise including market research, law, financial services industry, financial inclusion, European Regulation, financial regulation, consumer advice, campaigning, communications, compliance and later-life issues.