Fears for pension freedoms if change of government

A new government could destroy the public’s faith in pensions if it reversed the changes announced by chancellor George Osborne in the Budget, the chief executive of platform provider AJ Bell has warned.

Andy Bell said: “It is of major concern that a non-Conservative government will decide that the changes have gone too far, too soon and will scrap or seriously water down the change.

“If this happens we risk destroying the public’s faith in pensions.”

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His comments came as a survey of 300 advisers attending an AJ Bell investment conference revealed concerns about whether or not the reforms could endure a change of government.

Of those surveyed, 64 per cent did not believe the new rules would last more than a year after the general election in May 2015 if there were a change of government.

But 60 per cent felt that the pensions flexibility rules had gone too far, too soon.

Mr Bell said: “The political uncertainty could create a buy-now-while-stocks-last mentality, with savers feeling they have to act quickly before the rules are changed.

“This could result in many people encashing their pensions, irrespective of whether they have a genuine need for the money. Political pressure and a fear of change have a history of driving knee-jerk reactions when it comes to savings.”

The Labour party set up an independent review of retirement income in May 2014, led by David Blake, director of the Pensions Institute at Cass Business School.

Shadow pensions minister 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.”

Adviser view

Mike Williams, a director at Hertfordshire-based Chamberlain Stean & West, said: “Having started to show the value of pensions again, it would be a very brave government that would come in and change it.”