UK Politics

Budget among greatest ever, says Iain Duncan Smith

Iain Duncan Smith Image copyright PA

The Budget was "one of the greatest" and will make sure that "people who have actually tried hard will get rewarded", Work and Pensions Secretary Iain Duncan Smith has said.

The government plans to allow people to spend their pension pots how they wish rather than having to buy an annuity, which guarantees an annual income.

Mr Duncan Smith told Sky News they would not "blow" their savings.

Labour has said it will support the coalition's plans.

But it has asked for more detail on what they will mean "in practice".

In Wednesday's Budget, Chancellor George Osborne said new rules were due to come in from April 2015, subject to consultation, with some existing regulations to be relaxed from next Thursday.

'Listening mode'

It is expected that anyone over the age of 55 who belongs to a defined contribution scheme, such as a private pension scheme (as opposed to a final-salary scheme) will be able to take out their savings as a lump sum to spend or invest as they wish.

Mr Duncan Smith told Sky News: "I think this Budget will go down as one of the greatest Budgets, signalling a new departure for Great Britain's economy and for people who have actually tried hard get rewarded."

In the week, Liberal Democrat pensions minister Steve Webb said it was people's "choice" how they spent their pension pot, when asked if the money could go on a Lamborghini sports car.

Mr Webb told BBC One's Sunday Politics he was "very much in listening mode" over the way in which the changes would be implemented.

Mr Duncan Smith agreed that those over 55 would get more financial freedom, but added: "What they will actually do is to go out and find some (investment) vehicle to give them better returns than their annuities."

Asked whether many of those affected would put their money into buy-to-let properties, possibly creating a price bubble, he replied: "I'm not going to speculate on what somebody approaching retirement and not earning much in annuities will do."

The state, rather than savers, had "historically been the most profligate" user of money, Mr Duncan Smith said.

'No blank sheet'

Speaking on BBC One's Andrew Marr Show, Liberal Democrat Chief Secretary to the Treasury Danny Alexander said: "I think a lot of people will [still] want to buy annuities.

"There's still a very strong market there... This will also help to make the annuity market more competitive."

For Labour, shadow work and pensions secretary Rachel Reeves said on Friday that the annuities and pension market currently did "not work well for people who have saved all their lives".

She told BBC Radio 4's Any Questions: "I support reform and I support what has been announced this week, although we need to see a lot more detail about what that will mean in practice."

Speaking on the Andrew Marr Show, shadow business secretary Chuka Umunna said: "We need to see the bill and I'm not going to sign a blank sheet of paper."