Prime Minister David Cameron has spoken with the Derbyshire Times today, Thursday, March 27, on ground-breaking changes to pensions.
Changes announced in last week’s budget will make it easier for people to withdraw a big lump sum from pension pots to spend thanks to tax cuts.
This will affect 1.2m people in the Midlands thinking of retiring or coming up to retirement with over 550,000 in the East Midlands and over 125,000 in Derbyshire.
But some financial experts have argued savers will blow their money and create a greater dependence on welfare, elderly care support and relatives.
Mr Cameron, of the Conservative-Liberal Democrat Coalition Government, told the DT: “We should trust people to put money aside and it’s condescending to say they will blow money. We are giving them far more to spend as suits them.”
The Conservative politician explained a new single tier pension of around £140 per week will end means-testing where people have been measured on eligibility, savings and needs.
Mr Cameron said: “We’re bringing in a single tier pension. If people did go ahead and run down savings they would not then be dependent on a means-tested system.”
He argued such people would be reliant on a basic state pension which will lift them above any means-tested system.
Mr Cameron said: “Concern in the past has been that if you spend all your money you will then be reliant on a means-tested system.”
He feels the new system will encourage and reward and not penalise savers, where as previously others who have not saved have benefitted anyway from pension credits.
Mr Cameron added: “If you didn’t have pension savings you would get pension credit. So if you saved you would get penalised in old age because those who did not save would get a pension credit.
“The new system means people will not get penalised.”
The Government claims changes will nearly double the savings people can take as a tax-free lump sum from pensions to £30,000, as well as raising the limit on how much you can take out of your pension.
Mr Cameron also discussed the big issues with DT reporter Jon Cooper directly affecting our region including education and the teachers’ strike, HS2, M1 speed reduction plans and Atos and disability benefits.
Keep posted to the Derbyshire Times’ website for daily updates on this serialised interview with a full round-up in the Derbyshire Times newspaper on April 3.