Osborne’s budget giveaway for pensioners: never have so many lambs been so ripe for fleecing

We are now being presented with yet another almost unbelievable example of how ruthless the Tories are prepared to be in their own interest at the expense of the gullible and vulnerable. Already last year Osborne ruled that 320,000 savers a year with ‘defined contribution’ pensions would no longer have to buy an annuity – they could take the cash in their pension pot and run with it wherever they liked, whether buying a car, taking a world cruise, tapping into the buy-to-let market, or whatever feelgood bonanza took their fancy, and whatever the long-term consequences of running out of money. All for Osborne to cash in on the pensioners’ vote.

Now he’s proposing to go much further in today’s budget giveaway. He’s now intending that any of the existing 6 million pensioners who missed out on last year’s offer because they were already locked into annuity contracts should now have the opportunity to escape these agreements. The rush for the exit has already started, even though taking out and spending capital reserved for lifetime income could well disqualify such a person from free social care later.

The City sharks are waiting for them with offers of incredible interest rates if only they switch into some ‘astonishing investment opportunities’. These street-wise City operators are careful to avoid giving ‘advice’ which requires registration with the Financial Conduct Authority, but rather they offer such craftily worded help as a ‘no-obligation pension review’ with no upfront fees and no hidden charges. When you’re already burdened with oppressive debt, it’s very enticing to fall victim to ‘unlock your pension’ offers which artfully conceal unexpected taxes and usurious charges by the City wise boys. To save pensioners from this expropriation under the guise of helpful assistance, they need proper advice from a registered independent financial adviser, but that can cost £1,000 and so is out of the question.

The real problem behind all this is that the law has hitherto been rigged in favour of the finance industry by requiring people to take out annuities which have been appallingly bad value because of extortionate, though hidden, City charges. Currently the State affords pension tax reliefs amounting to £48bn a year, yet almost all of this ends up circuitously routed into the coffers of the big City firms. These charges could mean that somebody saving £100 a month ends up losing £160,000 over a lifetime! There was originally a government pledge to cap these sky-high charges, but after vigorous lobbying by the City this was quietly dropped – how convenient now for the exploiters who will make vast fortunes by beguiling needy innocents.

The shameless cynicism of Osborne in unleashing this just 2 months before polling day takes some beating. The best epitaph on this was written two millennia ago: Timeo Danaos et dona ferentes, which translates ‘I fear the enemy even when they come bringing presents’.

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