Hasty legislation on retirement annuities would be fundamentally wrong, the chairman of the Retirement Planning Council of Ireland, Mr Paul Kenny has warned.
The Minister for Finance is rumoured to be set to announce changes to pension legislation allowing pensioners more freedom to invest pension lump sums, in the Finance Bill on Thursday.
At the moment pensioners are obliged to buy an annuity from a life office which will then guarantee them income for life. But with the current low interest rate environment this can often be very low and there is undoubtedly a need for an alternative, according to Mr Kenny.
The Minister flagged such a change in December's Budget and the detail is now expected on Thursday. But many pensions experts are worried that the Minister may act against advice and introduce a complete free for all.
According to Mr Kenny, alternatives that could result in income running out during a pensioner's lifetime are wrong.
"The Government should take time to consider all the consequences of dismantling the current arrangements before taking action."
"The object of pension funding has to be to secure a life income. Regrettably, some proposals currently being mooted, to give the self-employed "control" over the capital value of their pensions are misguided, in that they are most unlikely to meet this fundamental objective."
He added that capital sums are often squandered or sometimes badly invested and even on occasion misguidedly given away or even misappropriated.
He added that the average annuity is only £5,000 a year which is not the pension of someone from the professional classes who can afford to pay for proper investment advice. "One of the reasons for preserving pensions under the Pension Act and limiting the availability of contribution refunds was in effect to protect people from themselves."
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