Will UK politics interfere with pension freedoms after general election

Published:  18 Sep at 6 PM
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Insurers and financial experts are holding meetings behind closed doors to discuss the possibility of a Labour win next May derailing last March’s budget changes to pension withdrawals.

Most pension savers as well as expats have welcomed the new pension freedom measures allowing them to withdraw or transfer their savings without having to purchase an annuity. Many hailed the new legislations as a masterstroke, whilst on- and offshore providers of the unpopular, often mis-sold annuity products shivered in their corporate shoes.

The UK’s Labour opposition was caught off guard by the jealously-guarded March announcement, but broadly welcomed the proposals as they were likely to be popular with older voters. However, senior Labour stalwarts were heard to refer to the changes as cynical, opportunistic and aimed at wealthier savers to the detriment of weaker investors.

Rumours are circulating over the likelihood of a Labour win next May heralding the reversing of many aspects of the changes. Talks between providers whose profits have been hard hit by the huge fall in annuity purchases are taking into account the political risks of the reforms’ introduction so close to a general election.

Although the Labour party has agreed not to oppose the reforms whether or not it forms the next government, it’s also stated that discussions analysing the effects of varying political scenarios are ongoing as per usual. Experts in the sector, however, agree that backtracking on the reforms will be a disaster for consumers already involved in flexible drawdowns as well as those fighting to make sense of their entitlements as regards new products.

Even so, most commentators feel that any attempt to change the new rules is unlikely to be found in the Labour manifesto, as removing flexibility would likely lead to a revolt by lower- and middle-class pension savers. Others, however, are warning that a Labour government in its second or third year in office might well attempt to flex its muscles as regards the present levels of freedom, thus leaving retirees in a state of uncertainty for the foreseeable future.
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