Should freedom include the liberty to do the wrong thing?
Many UK commentators seem to think not. The impending reform of UK pension provisions has certainly sparked debate on this very topic. The liberalisation of pension law – allowing people over 55 next month to take charge of their pension funds and spend/invest them as they wish – got a broadly favourable reaction when first mooted.
Now, with the crunch coming, the reforms have their doubters.
"Do Britain's independent financial advisers have what it takes to prevent millions of people walking into a pensions disaster zone? Don't bet on it: these small firms, which offer high quality financial advice to a minority of people who are prepared to pay for their services, do not have the resources or the reach to stand in the way of the dangerous juggernaut now speeding towards savers. You may therefore wonder why George Osborne, the Chancellor of the Exchequer, who first put the juggernaut on the road a year ago, today decided to put his foot on the accelerator. The answer is that he's less interested in the impending impact than in the votes that may come his way from those who are excited by the illusory feeling of freedom as the wind whistles through their hair."
David's point about the quality – or lack of it – of the advice available is a fair one. Nevertheless, we disagree with it.
On philosophical grounds, freedom must include the freedom to make mistakes. Pensions are deferred wages, saved into a fund. The savers should be able to do what they want with their money, even if that means buying a world cruise on a luxury ship, or a cutomised Maserati.
Practically, we believe that people are more sensible than that. There's the whole world of alternative finance, and plenty of good commentary about savings and investments available online and in the newspapers.
For all the foreboding, the pension reforms will go ahead, and pensioners will be freed of the tyranny of the annuity (an income producing vehicle offered by insurance companies – they have produced dismal value for years). With a little wisdom and some mature reflection, pensioners stand to benefit from the reforms.
See Money&Co. CEO Nicola Horlick's latest blog, penned from New Yorj, where she analyses the effect of the volatile oil price on stock markets.