8:00pm Tuesday 25th March 2014
By Robert Merrick
THE Chancellor’s pensions revolution risks fuelling a disastrous new house-price boom, one of the region’s MPs has warned.
Sedgefield’s Phil Wilson became one of the first Labour MPs to argue that giving pensioners total freedom over their retirement savings could backfire without other reforms.
Mr Wilson stressed he agreed that politicians should “trust the people” – George Osborne’s mantra, in scrapping compulsory annuities.
But he warned: “I do not have a problem with trusting the people - I have a problem with trusting the financial services industry.
“I understand why the Chancellor made his announcement, but I feel that his proposals are treating the symptoms and not curing the disease.
“What are they doing to ensure that 40 per cent of the retirement or savings pot will not be lost in hidden fees in the future?
“What are they going to do to ensure that the financial services industry does not come up with mis-sold financial products, as it has in the past?”
Mr Wilson, speaking in the Budget debate in the Commons, also echoed widespread fears after the Treasury said pensioners might wish to pump their savings into property.
And he called for the UK to look to countries such as Holland and Denmark, which had built “collectivist” pension systems, which shared risk and kept fees low.
The speech came amid fierce debate within Labour about whether to back the pensions revolution, which has given the Conservatives a ‘Budget bounce’ in the polls.
David Cameron accused Labour of “dithering”, after work and pensions spokeswoman Rachel Reeves backed the idea, but then appeared to backtrack.
Every year, about 420,000 people buy annuities worth £14bn - which convert a person's pension savings into an income for the rest of their life.
But falling interest rates and rising longevity have sent payouts to historic lows, making them increasingly unpopular.
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