The changes to pensions and annuities have caused a great deal of interest in my constituency, but many constituents are unsure what it means for them. This is dangerous, because the changes are being introduced quite quickly and many people will have to decide whether to defer taking their pensions until the changes come into play.
At one of my surgeries on Friday a constituent who had already bought an annuity asked me whether he could now take a lump sum instead. I fear that the answer to that is no as he had already entered into an annuity contract, but it shows that there may be some ill feeling about the sudden change among those who have only recently bought annuities.
It is also not clear to many constituents that the changes apply only to defined contribution schemes. Many are unsure what type of scheme they are in. Another constituent asked me how the changes affected his company scheme, but it seemed to me that that scheme was a hybrid, with elements of both defined contribution and defined benefit. Again, my understanding of the changes is that they would not apply to such schemes, at least at the moment. Have the Government given any thought to whether hybrid schemes will be affected? Will the possibility of taking a lump sum from such a scheme be limited, and if so, what impact is that likely to have on the scheme as a whole?
While I appreciate that anyone who is considering what to do would be well advised to seek professional advice, these are serious issues that require a clear answer to allow constituents in such schemes to determine what is in their best interests. They may have to do so fairly quickly. The changes could mean a huge change in how people save for their future, but I suspect that it
will also mean a huge change in how such savings are viewed, both by the general public and, crucially, by future Governments.