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Trust pensioners not to blow savings, says Osborne Trust pensioners not to blow savings, says Osborne
(35 minutes later)
Chancellor George Osborne has dismissed fears newly retired people could "blow" their pension pot under reforms introduced in Wednesday's Budget.Chancellor George Osborne has dismissed fears newly retired people could "blow" their pension pot under reforms introduced in Wednesday's Budget.
Mr Osborne said pensioners were "responsible people who are capable of making decisions about their future".Mr Osborne said pensioners were "responsible people who are capable of making decisions about their future".
From 2015, people reaching retirement age will be able to spend the money however they want, rather than having to use it to buy a guaranteed income.From 2015, people reaching retirement age will be able to spend the money however they want, rather than having to use it to buy a guaranteed income.
The move wiped £5bn off the value of firms involved in the pension industry.The move wiped £5bn off the value of firms involved in the pension industry.
It also raised concerns about a fresh buy-to-let boom if pension pots were used to buy property as a retirement income, or people deciding to invest their money in higher risk - and higher interest - things such as the stock market.It also raised concerns about a fresh buy-to-let boom if pension pots were used to buy property as a retirement income, or people deciding to invest their money in higher risk - and higher interest - things such as the stock market.
'Coherent reform''Coherent reform'
Personal finance experts said the proposed changes to annuities - bonds which provide a fixed income for the rest of the owner's life - will significantly change the way people fund their retirement.Personal finance experts said the proposed changes to annuities - bonds which provide a fixed income for the rest of the owner's life - will significantly change the way people fund their retirement.
It is expected that anyone over the age of 55 who belongs to a private pension scheme (as opposed to a final salary scheme) will be able to take out their savings as a lump sum to spend or invest as they like.It is expected that anyone over the age of 55 who belongs to a private pension scheme (as opposed to a final salary scheme) will be able to take out their savings as a lump sum to spend or invest as they like.
Mr Osborne dismissed concerns that retired people will spend all their pension at once and end up relying on the state.Mr Osborne dismissed concerns that retired people will spend all their pension at once and end up relying on the state.
"It's all part of a coherent pension reform," he told BBC Radio 4's Today programme."It's all part of a coherent pension reform," he told BBC Radio 4's Today programme.
"So we have a more generous basic state pension, less means-testing and that enables us to get rid of a quite old fashioned set of government requirements, put in place many decades ago, that people had to take out annuities."So we have a more generous basic state pension, less means-testing and that enables us to get rid of a quite old fashioned set of government requirements, put in place many decades ago, that people had to take out annuities.
"While annuities might be right for many people, they are not right for many, and returns from annuities have been much lower over the last 15 years or so."While annuities might be right for many people, they are not right for many, and returns from annuities have been much lower over the last 15 years or so.
"In the end, people who have saved through their lives, who have earned that money, I think should be trusted to make their own decisions, with good advice, about what to do with that money in retirement.""In the end, people who have saved through their lives, who have earned that money, I think should be trusted to make their own decisions, with good advice, about what to do with that money in retirement."
Lib Dem pensions minister Steve Webb is to make a Commons statement on the changes at 12:15 GMT. Lib Dem pensions minister Steve Webb is currently making a Commons statement on the changes.
Labour's shadow chancellor Ed Balls said he supported the "principle" of more flexibility over pensions, because the annuities market is "not working" and "people are being ripped off".Labour's shadow chancellor Ed Balls said he supported the "principle" of more flexibility over pensions, because the annuities market is "not working" and "people are being ripped off".
'Beer and bingo''Beer and bingo'
But he said scrapping it altogether was a potentially "reckless and irresponsible" move, which could "leave people running out of money".But he said scrapping it altogether was a potentially "reckless and irresponsible" move, which could "leave people running out of money".
"Will people with ordinary-sized pension pots be able and encouraged to withdraw all of their pension savings from their pension pot and either try and invest it themselves or spend it?" he asked."Will people with ordinary-sized pension pots be able and encouraged to withdraw all of their pension savings from their pension pot and either try and invest it themselves or spend it?" he asked.
"And if they do, what happens when the money runs out? Who then picks up the tab?""And if they do, what happens when the money runs out? Who then picks up the tab?"
Pensions changes were among a series of measures announced in a Budget that Mr Osborne said would reward the "makers, doers and savers".Pensions changes were among a series of measures announced in a Budget that Mr Osborne said would reward the "makers, doers and savers".
However, hours after he outlined his plans, the Conservatives faced a backlash over an advert highlighting changes to beer and bingo taxes.However, hours after he outlined his plans, the Conservatives faced a backlash over an advert highlighting changes to beer and bingo taxes.
The online advert, tweeted by Tory chairman Grant Shapps, said the cuts would "help hardworking people do more of the things they enjoy".The online advert, tweeted by Tory chairman Grant Shapps, said the cuts would "help hardworking people do more of the things they enjoy".
It was described as "patronising" by Mr Osborne's deputy, Chief Secretary to the Treasury Danny Alexander, who said he initially thought it was a "spoof".It was described as "patronising" by Mr Osborne's deputy, Chief Secretary to the Treasury Danny Alexander, who said he initially thought it was a "spoof".
Labour said it was "ill-conceived" and "condescending".Labour said it was "ill-conceived" and "condescending".
Ed Balls said: "The idea that working people can be fobbed off and patronised because 'they' like things like bingo and beer, it's the Conservative Party of the past. It shows how out of touch they are."Ed Balls said: "The idea that working people can be fobbed off and patronised because 'they' like things like bingo and beer, it's the Conservative Party of the past. It shows how out of touch they are."
But George Osborne said the controversy had been "whipped up by the Labour Party who didn't have anything else to say about the economy".But George Osborne said the controversy had been "whipped up by the Labour Party who didn't have anything else to say about the economy".
Conservative sources told BBC News they were "completely relaxed" about the tweet and "astonished" by the row, adding it would not be "pulled" because it was a "one-off" message and not part of any campaign.Conservative sources told BBC News they were "completely relaxed" about the tweet and "astonished" by the row, adding it would not be "pulled" because it was a "one-off" message and not part of any campaign.
In his fifth Budget - 15 months away from the next general election - the chancellor set out measures aimed at supporting the economic recovery, including tax breaks to boost productivity, exports and manufacturing.In his fifth Budget - 15 months away from the next general election - the chancellor set out measures aimed at supporting the economic recovery, including tax breaks to boost productivity, exports and manufacturing.
He said Britain was growing at a faster rate than any other advanced economy - revising growth forecasts up to 2.7% in 2014 - but he warned the job of recovery was "far from done".He said Britain was growing at a faster rate than any other advanced economy - revising growth forecasts up to 2.7% in 2014 - but he warned the job of recovery was "far from done".
Other measures announced in the Budget include:Other measures announced in the Budget include:
Are you thinking about retirement? If so, what do you think about the reforms to pensions introduced in the Budget? Email us at haveyoursay@bbc.co.uk adding 'Budget' in the subject heading and including your contact details.Are you thinking about retirement? If so, what do you think about the reforms to pensions introduced in the Budget? Email us at haveyoursay@bbc.co.uk adding 'Budget' in the subject heading and including your contact details.