LABOUR CALLS FOR PENSIONS GUIDANCE
Savers should have access to information and guidance to help them understand the new pension flexibilities announced by the Government, Labour has said.
Shadow financial secretary Cathy Jamieson said it was important to ensure that the changes unveiled by the coalition at the Budget had no unintended consequences.
But speaking at the start of the second day's report stage debate on the Finance Bill in the Commons, Exchequer Secretary David Gauke argued the pensions reforms had been "widely welcomed".
He said: "It is right that we give people greater control, greater flexibility. This is about ensuring that individuals are in the best position to make the best decisions for them. Yes, guidance is an important part of that."
Mr Gauke said it was important that individuals who wished to make use of the new pension flexibilities announced by the Government "do not face detrimental tax consequences if they take their tax-free lump sum and then defer a decision on how to access the remainder of their pensions savings".
He went on: "On Budget day the Government announced radical reforms that will enable people with defined contribution pension savings to have more choice and control over their pension wealth from next April.
"This greater choice and flexibility that these reforms will give pensions savers has been widely welcomed. There has been broad consensus that individuals who have been responsible and saved for their future should be trusted to access their pensions savings in a way that most suits them."
The Government, he said, would be publishing its response to the consultation on the long-term proposals in the "near future" and legislation would be brought forward later this year to implement the necessary changes.
Ms Jamieson underlined the importance of access to information for people to make an informed choice.
She said: "In essence the rules for accessing pensions have been greatly liberalised with the aim of affording savers increased choice and flexibility. In principle... we don't have a problem or an issue with supporting greater choice and flexibility, but we also want to ensure that savers are not going to in any way be exploited."
She added: "Our concern with some of the reform issues does indeed extend to face-to-face guidance that they have committed to provide. For many people, having those significant pots of money at their disposal is going to be that entirely new experience at a time in their lives where, as we've already heard, they may not properly have predicted what resources they are going to need and indeed their own longevity.
"So I think it is a bit disappointing that the Government hasn't been able to answer the questions that we raise."
Labour's amendment would require the Treasury to publish any analysis relating to the impact of the changes, including any assessment made of the impact of the provisions for independent face-to-face guidance.
Shadow pensions minister Gregg McClymont said the biggest danger with the pension reforms was not pensions minister Steve Webb saying pensioners could now "blow" their money on Lamborghinis in March, but that people would take their savings in cash rather than invest it because they have no confidence in the financial services sector.
Ms Jamieson agreed and said Mr Webb's joke about Lamborghinis would not go down well with people who had already lost their pensions after receiving bad advice.
Intervening in Ms Jamieson's speech, Mr McClymont said: "On that point around guidance, the pension minister's comments around Lamborghinis were particularly unfortunate because actually do you agree that the biggest danger isn't that hard-working, sensible people will blow their own money, but actually they will take it as cash and then not invest it because they don't have any confidence in the financial services industry and then their money won't be working for them?
"That's as big a danger if not more than the Lamborghini-type stuff that the pensions minister commented on."
Ms Jamieson replied: "I do think the infamous Lamborghini quote might have been in jest but I think that that kind of joke is entirely lost on those who perhaps have lost their savings due already to poor or insufficient advice.
"I do think you make a very, very valid point indeed.
"I do think to an extent the Government may well have begun to acknowledge this in terms that they need to expand the range of choices available and to ensure that there's a need to help consumers navigate those choices."
Labour's amendment that would have made the Treasury publish an analysis of the impact of the changes was defeated by 295 votes to 241, majority 54.
