The chief executive of NOW Pensions said while giving savers greater flexibility over how they access their pension pot was “good news”, there was a real risk that savers will end up making ill-informed decisions.
He said: “There’s no doubt that the annuity market in its current form is outdated and ineffective.
“But by introducing auto-enrolment, the government acknowledges that there is an inherent lack of interest in pension saving. To expect savers to have sufficient knowledge to make good choices at retirement, feels somewhat counter-intuitive.”
Last week’s Budget revealed that compulsory annuity purchase will be scrapped while the income requirement for flexible drawdown will be cut from £20,000 to £12,000 and the capped drawdown limit will rise from 120 per cent to 150 per cent.
Joanne Segars, chief executive of the National Association of Pension Funds, said: “It is concerning that there appears to be little robust modelling to reassure us the Government has understood the risk that a number of people will run through their pension pots far too quickly. We fear these reforms, without careful scrutiny, will leave a large swathe of people vulnerable to poverty in old age.”
David Smith, director of wealth management at Bestinvest, said: “Many will blow their pensions, some will self-invest it badly and others will draw too much, too quickly and be left destitute in their dotage.”