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Pensions shake-up a risk - minister

The minister behind the Government's pensions shake-up has said the policy is a "risk" because it relies on people managing their own finances.

Pensions minister Steve Webb told The Observer the changes, which will mean people aged 55 and over can take their pension pot how they like, were intended to "set people free".

From April 6, the 320,000 people who retire each year with a defined contribution (DC) pension will be able to take it as they choose, subject to their marginal rate of income tax in that year, rather than buying a retirement annuity.

The Liberal Democrat MP told the paper: "We wouldn't be doing it if we thought it was a disaster, but you do take a risk when you trust people with their own money.

"Paternalism feels safer but look where paternalism got us. It got us mandatory annuities and a lot of dissatisfied people. Of course you take a chance when you set people free but, as a liberal, that's why I'm in politics.

"I question this notion that spending all of a given pension pot before you die is inherently wrong. It may be the right thing, it may even be the best thing, to do."

But insurers have questioned how ready the Government, regulators, pension providers and advisers are ahead of the change in law, prompting Mr Webb to urge people to "stay in bed" on the day rather than rush to take advantage.


From Belfast Telegraph