Julian Knight: Give everyone earlier access to their pensions
We need more rapid action to make these products more transparent
Sunday 11 March 2012
A third of workers have told the National Association of Pension funds that they will not allow themselves to be auto enrolled into their workplace pension scheme in October. Lack of ready cash is of course a major, and understandable, reason but a sizeable minority cite lack of trust in the pension industry as well as distress over poor annuity rates.
I suspect, though, that when push comes to shove, rejection of auto enrolment won't be anything near a third of workers. Apathy for once will be working in favour of retirement savings. That's, after all, the idea of the scheme. But the industry and politicians ignore the NAPF's findings at their peril. It highlights again the disconnect between the public and the pensions industry; the feeling that many have that the insurance industry is selling them a pup, what with charges, anaemic performance and of course annuities. It's in this final area we need more immediate action.
The recent Association of British Insurers' agreement on reforming the way annuities are sold, as revealed a fortnight ago in this newspaper, is a good start but we need more rapid action to make such products more transparent and properly tailored to an individual's circumstances.
we also need to trust people with their pension money – early access should be allowed. Ideally pensions should be allowed to get closer to ISAs in terms of ease of access. Compare the two savings vehicles on pages 92 and 93.
If in the Budget the Chancellor scraps higher-rate pensions tax relief, which looks a possibility, then that will remove much of the need for the very restrictive access rules which govern pensions. If the tax break ain't so great then there is little harm in allowing people more freedom with their pot.
Housing Minister Grant Shapps has said he'd like to see council and housing association tenants carry out DIY repairs and then bill their landlords. "Rather than having to wait for landlords to act, tenants should be able to tackle their own DIY dilemmas — and get paid for it," said Mr Shapps.
Here's just a few of the reasons why this is a truly terrible idea. Tenant fraud, difficulties getting landlords to cough up, the massive costs of checking every bit of work for safety, and the fact most people are lousy at DIY and anything they do will have to be undone by the next tenant and so on. Just think of the bureaucracy.
Let's all sue
There must be something in the water, as this is clearly a week of bad ideas. Some insurers have called for town planners, ie the taxpayer, and architects to be sued for allowing homes to be built on flood plains. threatening action against local councils for what already stands will ensure the planning permission process is even more turgid, potentially coming to a full stop. This threat is part of the battle between insurers and the Government over flood defences. The current agreement where insurers insure flood-plain homes in return for more flood defences is ending. this is about insurers trying to cut a good deal.
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