Budget 2014: Pensioners should be 'trusted' not to squander their savings, George Osborne says

Pensioners are “responsible” and should be “trusted” to make the right financial decisions, George Osborne has said, amid warnings that his reforms could lead to elderly people squandering their savings. 

The Chancellor defended moves to allow people to cash in their retirement funds, saying it will help pensioners who have been getting a bad deal from annuities. 

Labour has questioned whether people could end up struggling financially if they spend all their money soon after retiring.

The centrepiece of the Chancellor’s fifth Budget was the scrapping of rules that force most Britons to use their pension savings to buy an annuity.

 Pension campaigners have welcomed Mr Osborne’s “savings revolution”, saying that it would finally stop people being forced to buy poor-value annuities that condemned them to receiving low annual incomes.

DYI Comments:  When it comes to the generalized public allowing retiree's to have a lump sum is total insanity.  Most will squander the money leaving them without a shilling to their name when they need it the most, especially in advance age.  The British government would be far better off reforming the insurance industry's annuity business or allowing systematic withdraw no higher than 6% per year.

Here in the good old U.S. of A. pension plans such as 401k's, IRA's (Roth) the money is too difficult to put in and far too easy to take out.  At least the U.K. by 2018 will have universal auto enrollment. Auto enrollment in the USA is just starting but has a default 3% of earnings into 401k's. That is a far cry from the necessary and minimum of 15% of income to fund a retirement. Human nature being what it is most will never increase the amount and end up being way behind when they finally realize the need to get serious about retirement.

Taking the money out (DYI's opinion):  For America's pension plans three generalized rules; (1.) Age 60 no lump sums (transfers are OK) purchase an annuity or systematic withdraw no higher than 6% (2.)  Early withdraw (before age 60) disability confirmed by two doctors.  (3.) Death.  This will stop the leakage.

DYI