Industry rejects call to let annuitants cash out
PP research finds little support for Steve Webb's latest idea
PP research has found little support for Steve Webb's latest idea for reforming the annuity market.
The majority of respondents to our Pensions Buzz survey said people who had already bought annuities should not be allowed to cash them in.
While 57% of respondents disagreed with Webb, a sizable minority of 30% agreed with him. Only 13% were unsure.
Those that opposed Webb’s position were more vocal in their views. They questioned the competence of policymakers to make sound decisions.
Retrospective legislation will create massive costs to the industry. And what if people spend the cash and then have to rely on the state to support them?
One said: “Selection risks mean the cash given will be rubbish and mis-selling rife. Avoid.”
Another complained: “I despair at how little the decision-makers understand insurance.”
The timing of the legislation was also scrutinised. “Absolutely not. Bringing in retrospective legislation will create massive costs to the industry. And what if people spend the cash and then have to rely on the state to support them?” said a respondent.
Those who agreed with the government in principle were still uncertain about how the change would be implemented and raised concerns about fraud.
“I agree with the idea, but am not going to suggest how it would work,” said one supporter of Webb.
But another argued there should be one standard for all members in the industry:
“Why should they have constraints applied that will not apply to newly retiring individuals? Everyone should have the same opportunities, whether or not these opportunities are for the better.”
One of the undecided reflected on the complexity of the issue: “This is a difficult one. Part of me says ‘yes, why shouldn’t they?’ although there will have to be a charge for the calculations to arrive at the cash sum, which will be different for every annuitant. But what the provider would then pay for an annuitant who (say) is over 90, and way beyond normal mortality, I don’t know.
“Then another part says no. Over the years legislation has been introduced which (from memory) has never been retrospective, so why change that now. That’s down to timing.”
To see all the results of this week’s Pensions Buzz survey, visit:
http://msgfocus.com/files/amf_incisive_media/project_1008/PB_221014.pdf
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