Labour: Osborne’s undermining savings
Allowing pensioners to spend their savings as they wish, rather than automatically buying an annuity, will lead to more splurges in spending in early retirement rather than more saving, senior Labour figures warned today.
Lord McFall pointed to forecasts showing higher tax receipts as a result of the changes, boosting the government finances but indicating pensioners will spend eagerly rather than increasing savings.
“The government depends on people spending this – it is a real contradiction in their plans,” he said at the Taxpayers’ Alliance and Institute of Economic Affairs’ post-budget event today.
On the other hand, it also gives retirees more say over how and when they use their savings.
Conservative MP Douglas Carswell backed the scheme and hopes it will lead to more restrictions being rolled back.
“The pension change is very bold and could have extraordinary implications,” Carswell said at the same event.
If you are going to give people greater choice in how they spend their money, it could have great implications for the future of paternalism in politics.
The people will love it, but I am not sure the politicians will.
And the Institute for Fiscal Studies disagreed with Lord McFall, predicting the greater freedom to spend pension savings will instead increase incentives to save.