Pension Freedom  

Government urged to extend pension freedoms

Government urged to extend pension freedoms

A campaign launched today (25 July) is urging the government to allow five million pensioners that retired before April 2015 to have access to pension freedoms.

The movement – entitled Your Pension Your Choice - claims that these individuals were forced to buy an annuity, which are "often low paying and restrict the ability of retirees to access their pension pot".

Drawdown used to be the preserve of wealthy pensioners, but since the introduction of pension freedoms, millions more pensions have been kept invested in the market rather than used to buy a fixed income via an annuity.

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According to the campaign, savers have cashed in £9.2bn from their pension pots since April 2015.

Under prime minister David Cameron there were plans to extend freedoms to pensioners, but the government later did a U-turn.

Earlier this year the current government confirmed it has no plans to reverse its decision to bin plans for a secondary annuity market.

In a written answer to Conservative MP Craig Mackinlay, who asked the if the government planned to extend to the annuity market the freedom people have to access their pensions, the City Minister John Glen said there were "no plans to review the decision".

He said: "It became increasingly clear that the conditions required for a competitive market to emerge, with multiple buyers and sellers of annuities, could not be balanced with sufficient consumer protections."

The campaign, which has also launched a petition online, is being funded by DRB Pension Assistance, the UK subsidiary company of DRB Capital. 

This firm, which is a purchaser of annuity payments in the US, offers liquidity and flexibility to individual sellers in need of money, who have guaranteed structured settlements, annuities and investment annuities, providing lump sum cash payments in return. 

Several MPs are supporting the campaign, with a cross-party group led by Scottish Conservative MP Paul Masterton launching an early day motion in Parliament.

Mr Masterton said: "Freedom and choice was a revolutionary pension policy which allowed individuals greater flexibility to tailor how they received retirement income to better fit their circumstances.

"But because the government has backtracked on a promise to extend that ability to individuals who retired before the changes came into place, more than five million people are losing out on the ability to access their pension pots in the way they please.

"Many of them are now stuck with very small, poor value annuities which aren’t their main retirement income and provide no meaningful benefit."