(Bloomberg) — The Chancellor of The Exchequer George Osborne’s impending changes to the pension system risks becoming an “infamous example of political bungling,” U.K. insurer Royal London Group said.
Many retirees are at risk of making wrong and “irrecoverable decisions” with few using the government’s new free pension-guidance service, Chief Executive Officer Phil Loney said in a statement Thursday. The U.K. insurer reported a 65 percent jump in fourth-quarter sales of individual pensions compared with a year earlier.
Osborne in his March budget scrapped rules forcing retirees to buy an annuity product with their pension savings, ahead of elections this year. The move, to be implemented in April, stunned pension providers, erasing more than $6 billion off the market value of the U.K. insurance industry amid concern revenue from annuities would drop.
“The new pension freedoms have been thrown into place in an entirely unrealistic timescale,” Loney said. “The meticulous approach to implementing change is certainly not a feature of the government’s latest pension reforms.”
Loney said addressing the lack of impartial and regulated advice should be a “high priority” for the next chancellor and pensions minister after the elections.
Standard Life Plc, Scotland’s largest insurer, last week announced its own financial advice business after buying wealth manager Pearson Jones Plc to take advantage of a gap in advice amid the new pension rules.