George Osborne has announced in his budget statement the scrapping of pensions access restrictions.  It’s a move that will, I believe, lead to a deepening of the UK crisis in the long-term.

As was reported in The Independent, to my mind this is an extremely “dangerous and short-sighted” approach for the government to adopt, bearing in mind the ageing population and the inevitable burden on the State that this presents.  Should retirees spend a large proportion of their savings in the early stages of their retirement, it will, naturally, be the State that will be left to foot the bill – and the State is already engulfed by mounting medical and care costs.

Although in the short term the move may lead to an increase in tax revenue if people take out their life savings in a lump sum – something that wouldn’t have escaped Osborne’s attention! – the long-term effects of the move could, clearly, be catastrophic for both individuals and the wider economy.

The whole notion goes against the main principle of pensions – which is to provide people with revenue throughout their retirement years, and as I said for ITV News, this latest announcement by Mr Osborne flies in the face of this.

In order for the country to continue to grow and maintain a strong degree of economic stability, as many people as possible need to be financially secure and able to fund their old age independently.  However should pension pots be empty, or have insufficient funds for individuals to live on, people will be dependent on the State.

On the other hand, I was very pleased to hear the Chancellor’s plans to stop forcing people to buy annuities.  As people will be spending more and more time in retirement in the future, it’s important that the government makes it as attractive as possible for them to save for their golden years.  This new measure will allow individuals the right to the total amount of their capital, as opposed to buying an annuity, the returns on which have been somewhat disappointing over the past few years.

deVere Group’s international investment strategist, Tom Elliott also appeared on ITV’s Daybreak yesterday morning, as well as ITN’s News at Ten on Wednesday to talk about the 2014 Budget.

Nigel Green deVere Group