Your whole pension pot is yours the day you retire

[Technical]

I completely understand why this has been done and agree fully that an alternative to poor performing annuities needed to be found but am I alone in thinking this is a bit scary? (I know I'm not because I heard a Labour politician saying it but I thought it first!)

It was my first comment to Dh when we were watching the news. We know that legislation/incentives are required to "force" people to save for their retirement. If those same people are given a large lump sum the day they/we retire, what % do you think will still have funds to live on, should they live another 30/40 years?

How many of the general public have the skills/knowledge to invest it safely and ensure their income keeps place with inflation, especially bearing in mind that very many will live several decades after retiring?

But I agree, the "piss it up the wall" "spend it on a fast car and posh cruise" crowd aren't the type to have a large pension pot in the first place, just start a thread on here asking about other people's retirement plans, there's so many woman in their 40s with no plans, no savings started yet. Or you get people like me, who did join the company scheme in their 20s, but have been saving the minimum amount to get the cmpany to match it, I know it's not going to be enough for a large pot in retirement, but I until the DCs are school age and childcare costs falls, I just can't afford it.

I just read an interview with Boris J's sister and I really felt she was letting the side (female ) side down and I wondered if she had a very gender biased childhood - women serve and look after children and men earn. She knows nothing about pensions and does not have one. We somehow need to change that attitude amongst women particularly now so many earn more than their husbands do. Okay the average person unless they are in the public sector will probably not have much more than £7k a year state pension (or £14k per couple) but women who earn a bit more than average should be trying to save up if they can whether within a pension or in some other form,.

Yes there might be people who would 'blow' the lot.

However the right to a choice in the whole matter is the important thing. I have a very small private pension that I paid into for 10 years when I was younger, and as an annuity it would be worth very little each year. If I still had a mortgage when I retire it might make far better sense to use the money to pay that off, rather than have a monthly income of less than the mortgage payments?

I will never pay into a private pension again. In my early 20s I was in local government and took redundancy when the two tier council system was abolished in 1985. A few years later during the big late 80s 'loadsamoney' attitude of taking out a pension so we could all retire at 50, I was mis-sold a pension product when the salesman (I thought he was some kind of kind, nice, pension adviser but he was just a hard selling salesman after his own commission) advised me to transfer the money out of that local government pot, into his companies funds.

His reasoning being 'now that you have left local government that money will not be growing and will be worth nothing when you retire'.

His company took 40% of the money I transferred across, as commissions and fees .

hindsight is a wonderful thing....

I only found this out when I was written to by a Pensions Ombudsman type organisation in the 90s. I didn't even approach them! I was told that I'd been mis-sold this transfer and was given some financial compensation into that pension pot by the offending company. Shortly after that I transferred the measly pot (after 15 years of contributions it wasn't worth the money i'd paid in) when I got a job whose pension scheme was with a far better known company (Standard Life).

I was sold that pension in good faith by a qualified 'adviser'. Just as people are sold Endowment policies and PPI. Every so often a new scandal comes out regarding innocent people being duped by these institutions that pretend to help you look after your finances.

Is it any wonder that people who are now approaching retirement age, many of whom were sold crap pensions in the 80s and 90s 'pension boom time' - money that they paid in to these crap schemes but can't touch unless as an annuity after they retire - is it any wonder that we are all applauding the new schemes.
-- gets off soap box---

Also, if these changes bring about changes to the way pension annuities are sold and managed, then I MAY consider buying one from Standard Life.

I believe this move could once and for all wipe out any chance our young adults have of ever buying property, as the BLT market explodes .

FWIW, I also think an awful lot of people will blow the lot (the Crash happened because too many people did not understand credit or debt, let alone 'compound interest') but, seeing as so many 'of a certain age' will do it all at once, they will still form a solid voting block so the government of the day will seek to mitigate against these folks' foolishness so as to keep them voting on-side. Just like the majority of other recent governmental policy has been designed to do, to keep The Boomers happy thus voting as required.

I thought the full pot as cash option was only available if you already had an income of a certain amount? Or am I mixing it up with the new trivial commutation rules?

Anyway, I share everyone's concerns but I also think that cometh the day, retirees will

a) take one look at the net amount of their fund after the tax deduction and think 'no way am I paying all that in tax' and
b) will be very aware they need an alternative monthly income if they're thinking of giving up work.

It will however help those who have a £50k pot somewhere and a decent income from another pension/ source as it means they can use the £50k for something else instead of buying a piddly annuity which they don't need.