Campaigners are urging the government to revise pension freedom rules to extend the policy to people who retired before April 2015.
According to the ‘Your Pension, Your Choice’ campaign, some five million pensioners who retired before April 2015 do not have the same pension freedoms as those who retired after the policy was introduced.
Those who retired after the freedoms were able to purchase an annuity, invest in a drawdown account or cash out their entire pot.
However, people who retired before April 2015 were effectively ushered towards buying an annuity unless they met certain criteria.
Since its introduction, savers have cashed in £9.2bn from their defined contribution pension pots.
In the last parliament, the government agreed to extend freedoms to this cohort, only to U-turn on plans. It’s annuity resale plans had been widely trailed but we then scrapped after providers spent millions developing infrastructure to allow the sale of annuities in payment.
The campaign group said it aims to draw attention to this “injustice” and encourage government to give five million pensioners full pension freedoms.
To mark the start of the campaign, a ‘Change’ petition has been launched to gather public support, while a cross-party group of MPs, led by Scottish Conservative MP Paul Masterton, have launched an early day motion in parliament.
Masterton said: “Freedom and choice was a revolutionary pension policy which allowed individuals greater flexibility to tailor how they received retirement income to better fit their circumstances, but the government has backtracked on a promise to extend that ability to individuals who retired before the changes came into place – more than five million people are losing out on the ability to access their pension pots in the way they please.”
He said many of those retirees are stuck with “very small, poor value annuities”, that are not providing a meaningful benefit.
He continued: “I welcome the launch of this new campaign and look forward to working with them to make the case to government for this vital change.”