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Govt. secretly briefed Which? before pensions Budget bombshell
Consumer champion Which? was one of just two organisations told about the pension reforms before last year’s Budget, the organisation’s executive director has said.
Richard Lloyd said he was secretly briefed by the Treasury alongside another body, also “not industry”.
He said the fact the government turned to consumer bodies for advice was “indicative of a shift in mindset” and showed the government wanted to “make it work for the consumer”.
The other body present at the briefing remains unnamed.
Lloyd suggested the industry had had “years of warning” that something was going to happen.
“The [Treasury’s] mindset was ‘this is for the consumer’. This is a massive shift and I welcome that.”
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The financial services sector was shocked when Chancellor George Osborne used his fifth Budget speech to unveil an unprecedented package of pension reforms, clearly stating “no one will have to buy an annuity” in the future.
Speaking on 19 March 2014, Osborne said some 13m defined contribution (DC) savers were being railroaded towards buying an annuity with their pension savings but this would end from 6 April 2015.
The share prices of all the major annuity providers tumbled following the announcement.
Annuity sales have plummeted in its wake.
Osborne also said each and every DC saver would get “free impartial advice on how to get the most of their pension”.
Since then the promise of guidance has grown into what is now known as Pension Wise. The service, currently undergoing beta testing, will be offered free to every retiree who wants to take it up.
The Pensions Advisory Service will offer phone-based guidance while Citizens Advice will offer face-to-face guidance sessions. The Treasury has tasked both organisations with delivery and is assisting with staff training.
Providers will have to ask retirees a set of questions and refer them to guidance and regulated financial advice before allowing them access to their pots.