Poll:Is the latest pensions plan a good idea?

[Image: Telegraph.]

[Image: Telegraph.]

The Coalition government is proposing a new change to pensions, making it possible for you to access the money in your pension pot at any time, paying tax on only a quarter of what you take out.

As someone with a string of workplace pensions dangling behind him, Yr Obdt Srvt tends to think this is a good idea – if it means that money can be removed from those places and put into a single scheme where it will be worth more.

No doubt the devil will be in the detail.

It seems George Osborne told the BBC: “From next year [people will] be able to access as much or as little of their defined contribution pension as they want and pass on their hard-earned pensions to their families tax free. For some people an annuity will be the right choice whereas others might want to take their whole tax-free lump sum and convert the rest to drawdown.” What?

“We’ve extended the choices even further by offering people the option of taking a number of smaller lump sums, instead of one single big lump sum.”

The BBC report quoted “pensions expert” Ros Altmann (who?) as follows: “People need to know that their pension provider will allow them to take advantage of the new freedoms. Currently, most pension companies are not ensuring that their customers can take money out flexibly. I call on the industry to make sure that people can really benefit from the new pension changes as quickly as possible.”

Let’s have a poll. This seems like a more complex issue than some, so please feel free not only to answer the question but also to comment on what this may mean. Here’s the question:

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17 thoughts on “Poll:Is the latest pensions plan a good idea?

  1. Tony Dean

    Given the amount of tax people are going to pay on any lump they withdraw it is not a good idea.
    Quite frankly there has been a lot of anti-annuity propaganda flying about.
    Few people reach retirement age without some kind of health impairment.
    Impaired life annuities pay interest rates that can’t be matched by any other fixed rate annuity.
    I have a 7% annuity and my wife has a 9% annuity.
    I suggest doing a lot of research before cashing in a pension pot.

  2. annak53

    Yes this does sound a good idea, if you can believe them. However, I believe this is another ploy to distract people from the fact their State Pensions have been stolen from under their noses.

  3. Jonathan Wilson

    The only way private pension “pots” work is either by new entrants paying in (its a glorified ponzy scheme), or gaining a large base increase prior to people taking the money out via investments of the “pot.”
    If people are allowed to take large amounts out, which they previously were not, then the whole “pot” will collapse as there will not be sufficient sums left to use as investments by the pot holder.
    Also while it initially will give a short term boost to the economy via “real” money being added, if people spend the cash and then no longer have sufficent investments to pay for the longer retirement then again the whole thing will fall down with the Gov having to make up the short fall, or pensioners starving (by saying tough, you spent it unwisely!)… which will load costs onto the NHS and other bodies, so again will not save any real cash in the medium to long term.
    Seriously giddiot is living up to his meme of being thick.

  4. Jenny Hambidge

    The vote clearly shows that many people don’t understand the issues involved.I know I don’t but then, as I have had a chronic disabling illness and I am one of the hated benefit scroungers I have been too poor ever to have been in a situation where pensions even register on my horizon.
    However I’m sure the Tories are not offering this out of any altruistic motive.

  5. Peter Lawless

    The release of pension cash will be taxed and is a cynical ploy by Osborne to boost revenue and help get himself off the hook.

  6. zoek

    I think it’s a good idea in principle as everyone should be able to access their money easily. I would only take the tax free lump sum at this stage as taking all of it, unless you are wealthy, could have implications on any income related benefits you may need, now or before retirement age. I don’t trust Osborne at all as I feel there may be an element of compulsion to draw your pension early to support yourself rather than draw state benefits.

  7. Andy Robertson-Fox

    Well said Dr.Ros Altmann OBE your background and knowledge of the pensıon industry ıs well documented and deserves to be treated and consıdered wıth respect even ıf some may not agree with you or even know who you are..
    Lıke all schemes ıt wıll be benfıcıal to some and perhaps not to others and the recommendatıon ıs to take professıonal advıce before embarkıng on any pensıon plan and determıne what is best for you.

  8. Chris Kitcher

    My gut instinct is that if Osborne has put this forward it will be a good deal for the rich and a poor deal for the poor. I suspect that it will not matter much either way for middle incomes people other than it panders to their dreams of less state intervention. Like of Osborne’s budget foolery we need to wait and see what people with more intelligence than him think about it.

    1. Mike Sivier Post author

      You think people on middle incomes want a smaller state? To me, that indicates they’ve been led up the garden path – that they’ve been persuaded that they’re better-off than they really are.

  9. casalealex

    I do not have any other pension than the State Pension. However, if I did have workplace pension, I definitely would not take up this offer, without proper legal advice to understand my options, as I do not trust this government. My first thoughts on hearing this was. “What is in it for Georgie Boy?”. I too thought it was partly to ensure the support of this group of people in the General Election!

  10. Barry Davies

    so you spend it now which is what osborne needs to boost the economy before the next election, and then starve to death under ids’ fascist benefits scheme.

  11. Jonathan Wilson

    Someone pointed out, and I’m not sure the full implications of this, that prior to the change a person could take a “25% tax free” lump sum of thier pension pot…

    With this change the devil is in the detail which is “25% of any take out is tax free” so unless you took the whole, 100%, pot out you would no longer get 25% tax free but instead pay tax on 75% of any cash taken out where as before you would pay nothing on the whole amount taken out “up to” the 25% take out limit….

    So, unless I am wrong, this is actually a tax increase; as it would be daft to take the whole pot, and possibly? impossible, unless it was for some other kind of investment with a higher, but more risky, return…. if the sum allowed to take out is actually 100% of the pot, to take anything less would be stupid as you would be paying tax on a proportion of the money taken out each time you did it.

    It may well be that overall the tax part works out identical, but how its aportioned would change from ziltch for 25% cash taken and rest left alone, to taxed on 75% taken, each time, until the full amount of the whole pot was taken.

    If thats true, then as a head line it looks good, but in reality its another f’in cockup tax take by the back door by Giddiot.

    1. Mike Sivier Post author

      No, with this change, 75 per cent of what you take out is tax free. My understanding is that, before this move comes into effect, people under 55 aren’t allowed to take out any of their pension money. Does that alter your perspective?

      1. Jonathan Wilson

        Well in that case I’m taking all my money out, and blowing the wodge on… a couple of kebabs :-/

        Seriously my non state pension is pathetic, a few pounds a year at best and I’d be buggered if I even know who its with… knowing my luck it was the one that collapsed and has been in a legal wrangle for compensation for the past few years.

        Contract out they said, will be good they said… a healthy retirements and a couple of grand in ya back pocket they said… 🙁

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