UK Politics

Labour will support pension reforms, says Rachel Reeves

Shadow work and pensions secretary Rachel Reeves
Image caption Labour's Rachel Reeves said she wanted more detail about the pension reforms

Labour will support government plans to overhaul pensions, the shadow work and pensions secretary has said.

Rachel Reeves told BBC Radio 4's Any Questions she supported the changes announced in Wednesday's Budget.

But she said much more detail was needed about what the changes would mean "in practice".

The proposed reforms will allow people to spend their pension pots how they wish rather having to buy an annuity, which guarantees an annual income.

The new rules are due to come in from April 2015, subject to consultation, with some existing regulations to be relaxed from next Thursday.

'More flexibility'

Speaking on Any Questions, Ms Reeves said the annuities and pension market currently "does not work well for people who have saved all their lives".

She said: "I support reform and I support what has been announced this week, although we need to see a lot more detail about what that will mean in practice."

The party wants the consultation to consider whether the move helps lower and middle income taxpayers, whether people who want to buy an annuity under the current system can do so, and what provision is made for advice.

Ms Reeves said "wider reform", including a cap on pension providers' fees and charges, was needed.

Asked to give an undertaking that Labour would not seek to overturn the reform, she added: "I don't think the annuities market works for people at the moment, so I support reform and I support the changes that people have more flexibility about how to access their money. I can give that assurance."

She said she believes "the majority of people" would not choose to draw down their full pension.

'Complex proposals'

Labour leader Ed Miliband earlier insisted he backs more flexible rules on pensions, but said his party wanted to look at the detail before they support the changes in Parliament.

"We're certainly not going to reject these proposals out of hand," said Mr Miliband. "That would be the wrong thing to do.

"These are complex proposals. We need to scrutinise the detail and we need to have some clear answers from the government on some of those questions."

Some in Mr Miliband's party, including former front bencher Tom Watson, had criticised the plans.

Writing on his blog, Mr Watson said the move was "a one-sided charter for tax avoidance" that was unfair on younger taxpayers.

It is expected that anyone over the age of 55 who belongs to a private pension scheme (as opposed to a final-salary scheme) will be able to take out their savings as a lump sum to spend or invest as they wish.

Advice 'critical'

Chancellor George Osborne has dismissed fears newly-retired people could "blow" their money.

A Downing Street spokesman earlier said that under the rule changes, pensioners were guaranteed independent advice before making any decision about their pension provision.

Joanne Segars, chief executive of the National Association of Pension Funds, told BBC Radio 4 this advice would be "absolutely critical", but said there was "very little detail" so far.

Baroness Sally Greengross OBE, head of the International Longevity Centre think tank, agreed that "advice, and the right sort of advice, is absolutely critical".

Speaking on BBC Radio 4's Money Box, pensions minister Steve Webb said a "guidance guarantee" would be in place to help people and "warn them to be careful of some of the rogues who we know are out there".

Although pensioners who have already taken an annuity will not be able to cancel it following the rule change, the government will look at the cases of people who are still in their "cooling off period", he said.