If one thing can sully the appeal of retirement, it’s the ugly task of organising a pension.
From April 2015, individuals will be allowed the option of withdrawing their pension in a lump sum (subject to tax at their marginal rate). While this option will be appealing for many retirees, many more will be uncertain whether such an action would be appropriate for them.
The pensions market is a complex and daunting environment to embark into. A would-be retiree must take stock of every owned asset and carefully negotiate the murky waters of pension funds, life insurance, annuities and equity release.
Mark Hoban, former financial secretary to the Treasury and minister of state for work and pensions, has rightly expressed concern that those considering their retirement options could use some sound financial advice, and that the Government might step in to provide it.
However the senior Conservative MP has proposed a bizarre approach: rather than simply offering free financial guidance at retirement – as has already been promised for those wanting access to their defined contribution pensions after April 2015 – Hoban has called for the creation of a private wealth database. This database would contain information on all individual’s personal finances, termed the “Retirement Saver Service”, and would be mutually compiled by banks, insurers and other financial firms. As Hoban explained in a speech on the 17th July:
“The fragmentation of information makes it harder for people to get a clear picture of their savings and their future savings needs. … It would be great if we could use the Retirement Saver Service to store data on their savings, pensions – state and private – and housing.”
Why will the Government need a comprehensive database detailing the private financial information of the many, so that it can offer bespoke pensions advice to the few? The senior MP’s suggestion sounds like a shallow attempt to use a wholesome policy as a vehicle to smuggle in greater state control.
Even if Hoban’s intentions are salubrious, why introduce such needless over-complication? As we have seen over the course of the last few years, the British public do not want to be monitored. A database containing their personal financial information would represent a gross invasion of privacy.
Furthermore, in its very nature, such a database would be a highly attractive target for cyber theft – a much over-looked and ongoing threat. Why create an additional national security vulnerability when it would be entirely unnecessary to begin with?
People will desire good advice when considering their pensions options – and it would certainly be widely appreciated if the Government were able to offer free assistance in this regard. However if an individual wants financial assistance, then those assisting them need only the details of that individual’s finances – not the personal finances of the rest of the nation.
If advice is desired, government assistance could be offered – but on an individual basis. In the meantime, please allow everyone else their right to financial privacy.
