Amidst all the legislation change that Osborne’s Budget has revealed, the pension changes are the ones, which, strangely enough, have managed to catch my attention. According to the new budget, from April 2015 the current restrictions in place over the withdrawal of pension funds will be eradicated and pensioners will be free to withdraw their privately saved funds in whatever way, and amounts, they wish.

Currently, people who have saved for their retirement, once pensioners, can withdraw 25% of their savings, tax-free. The legislation change being introduced by Osborne will cut the tax on withdrawing the remaining 75%, which will ultimately give people increased freedom and flexibility over how they spend their savings. This will affect anyone that has been saving in a workplace or personal scheme where payments are not based on an individual’s final salary, but rather the performance of the fund.

The changes will also allow people to avoid pension annuities, which are financial products bought from providers, who make fixed monthly payments to pensioners from these retirement savings to provide them with monthly income for the remainder of their lives. Pension annuities are disliked by many for an array of reasons, one of which being that they often lock people into an income for life, with no chance of increase if rates improve. In addition, one of the worst elements in my opinion, are the restrictions put in place to pass on any remaining funds to relatives and loved ones after the pension annuity holder has passed away. For those willing to pay extra, this of course can be avoided, but is far more expensive and any money later passed on is taxed at a phenomenal 55% on its lump sum withdrawal. The perks you ask? Well apparently it stops reckless pensioners from going wild with their own saved cash.

Now we are passed some of the more nitty-gritty details of these changes, it has surprised me that this has become such an area of debate and dispute amongst many politicians and the public alike, with it even being debated on Question Time a few weeks ago. My question remains to those who are opposed, by preventing our pensioners from having complete access to their retirement savings, are we babying our pensioners?

The idea that people are questioning this legislation as they believe giving pensioners access to all of their savings cash-free, in lump sums, will causes them to spend erratically and irresponsibly, I believe to be a bit of an insult to our elderly population. Despite proving to be financially competent for a large proportion of their lives and making the wise decision to make these savings, is it not justified that we allow them access to their own money to do as they please?

Another argument that has been raised in opposition to the change is that there could be a rise in the number of pensioners who will become victim to fraudsters and scammers, with this financial freedom for pensions making them more of a target once they have access to more money. There could be some truth in this, however I feel this does not mean that the government should have the authority of restricting people from accessing their own savings as a precautionary measure.

Personally, I believe that this move, despite the problems and opposition is a good one. I feel if someone, of any age, has worked and saved money, for whatever period of time or use, deserves to have full access rights and authority on how they use this money. With this in mind however, now we have helped the financially savvy pensioners of tomorrow buy better sports cars and build better swimming pools, with, according to figures from last year, 1 in 5 pensioners living below the poverty line, have we now got time to eradicate pensioner poverty? Has the time finally come to stop pensioners freezing in their own homes and leading deprived lives? Well, it seems we will have to wait for George to decide on that one.



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