Irish retirees should have complete pension freedom

Last week, we had the headlines No pension freedom for Irish retirees in The Irish Times and the most sensationalist headline Fears pensions will be cashed in for Ferraris in the Independent. Both articles said that members of the Irish Association of Pension Funds (IAPF) didn’t think that it was a good idea if people cashed in the pension funds at retirement. Seeing as the IAPF’s members manage these funds, that’s hardly surprising!

All of this was in reference to the introduction of Pensions Freedoms in the UK, where UK pensioners are no longer forced to purchase an annuity at retirement and can manage the fund themselves or cash it in. As a result, there has been a lot of scaremongering in the media that people will cash in their pensions and blow their pension savings in a few years, or invest in dodgy investment schemes. The IAPF echoed this, that individual’s won’t be able to manage their pension pot over the long term.

What surprised me about these articles is that we have plenty of evidence to look at here in Ireland. Pensioners have had the option to cash in their pensions since 1999, when the Approved Retirement Fund option was introduced. The reality is, this is very rarely done. If someone is prudent enough to save for their retirement, they aren’t stupid enough to go an blow it once they stop earning an income. The IAPF know this and lobbied against it at the time, eventually getting the nonsensical AMRF.

We are now 17 years and two global recessions since the Irish version of pension freedoms was introduced. Why don’t the IAPF ask their members how many retirees cashed in their pension at retirement? I guess the answer is a very small amount.

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