Simplifying, when you retire you had to give all your money to an insurance company in return for an annual income until you die. If you die the day after signing the contract that's tough luck.
Now you don't
The risk, though, is you'll end up with a bunch of 80 or 90-somethings who have spent everything in their pension pot and require a lot of state support.
Forcing people to buy an annuity was a quid pro quo for giving them the tax relief on pension savings - it was the state ensuring that you would use the money to provide yourself with a reliable income in return for the tax relief.
I know there were problems with annuities, because rates have crashed, but disposing of that guarantee will surely create problems down the line.
On the plus side, the added flexibility may make more traditional pension saving more attractive relative to buy-to-let investing, and so it may help first-time buyers in the housing market.
That's true - when I've seen this talked about in the past it was always contingent of having a minimum income guaranteed at such a level that you didn't get any means tested benefits. I've been in a Board meeting this afternoon so haven't looked at the detail announced today.
I do remember the PB Hodges declaring the Omnishambles as the best delivered budget in living memory and the response by the LOTO was useless.....oh, how we laughed.
I don't remember you posting then? Were you still lurking?
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We have truly entered the Twilight Zone on here this afternoon! I loved the Ginger analogy.
Dan Hodges says Ed's budget response was a disaster for Ed Miliband.