Chancellor's decision in the Budget to release people from the obligation to use their pension pots to purchase an annuity has been broadly welcomed. The Coalition have portrayed it as a blow for individual freedom and evidence that they trust people to make the best decisions when it comes managing their own money. In fact, what it may be is an attempt to release a vast reservoir of previously protected funds, allowing the financial services industry access to it so it can sell new products to people designed to provide them with the money required to pay for the social care they will need in their old age. In other words, the government's policy response to the Dilnot Commission is a deregulation of the pensions industry that will leave people arguably less protected and more vulnerable to the marketing departments of large financial institutions. I came across this blog post from John McDermott of the FT. It's only short and well worth a read. He quotes a section from the Treasury's post-Dilnot formal consultation document entitled Freedom and choice in pensions. This basically says that the government spoke to the big financial firms with a view to coming up with a market solution.
'The review identified that the financial products most likely to develop in the short term will leverage the assets people have, specifically housing and pension wealth'.
McDermott says that the pension changes announced in the budget...
'...will provide a source of money for the financial products the government wishes to see developed for those in need of social care'.
Given the track record of the financial services industry over the last decade or so, I think it is fair to ask if we have witnessed the origin of the next major miss-selling scandal that will rock the nation in ten years time.
No comments:
Post a Comment