Policy Response

Freedom and choice in pensions

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Freedom and choice in pensions

Published June 2014

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In June 2014, the CIPD responded to the HM Treasury consultation on Freedom and choice in pensions

The Chancellor George Osborne announced during Budget 2014 substantial reforms to the way individuals could access their Defined Contribution (DC) pension. The Government proposed that from April 2015 people will be able to access their DC pension as they wish during retirement, subject to their marginal rate of income tax. The consultation explored the proposals to change the tax rules and for introducing a guarantee that every individual with a DC pension will be offered free and impartial face-to-face advice and guidance on what financial choices they should make when they retire. 

In response to the consultation, we gathered member views using an online survey and consulted members of the CIPD senior reward panel. The CIPD welcomes the Government’s proposals to increase flexibility and choice for DC pension holders, and believe that providing those approaching retirement with a guidance guarantee will be beneficial for employees and employers. However, it is vital that financial education and support is not a one-off intervention and must be of considerable quality if individuals are to adequately plan for their retirement. 

We also believe that: 

  • a statutory override should be put in place to prevent individuals from taking advantage of increased flexibility
  • the pension access age should increase in line with, but not faster than, the State Pension age 
  • Defined Benefit to Defined Contribution scheme transfers should be allowed to continue.