Labour have urged the government to ensure that none of the 320,000 savers who will be looking for pension annuity replacement products from April suffers from rip-off charges.
Around 320,000 people are expected to take advantage of new pension flexibilities announced in this year’s Budget. From April next year many savers will access part of their pension while keeping the rest invested in the stock market. The Government has not included this kind of investment – income drawdown – in its plans to combat rip-off pensions.
In May 2014 Labour established an Independent Review of Retirement Income led by Professor David Blake, Director of the Pensions Institute at the Cass Business School to study how savers in defined contribution schemes can boost their income in retirement. One question Professor Blake will consider is whether income drawdown products should be subject to a new charge cap. Another is whether the risks facing savers can be reduced in risk-sharing schemes which are common in other countries such as Holland. A consultation paper on David Blake’s pension review will be launched on Monday 24th November.
Gregg McClymont said: “Labour welcomed the new pension flexibilities announced in the Budget, but we are concerned that the government has not thought through the risks of rip-off charges being taken from the savings of hardworking people.
‘I welcome the announcement by David Blake’s Independent Review of Retirement Income that they are studying the case for a new charge cap on pension products offered to savers by their pension provider to replace annuities.
‘Labour is on the side of people who work hard, save and do the right thing and we will act to ensure savers are protected from rip-off fees and charges.”