An inquiry into pensions freedoms has been deemed critical with increasing number of scams and potential misspending.
This article is for information only and no recommendation is being made or should be construed from the contents of the article. Always seek independent financial advice prior to taking any action.
This inquiry is being led by MPs on the Work & Pensions Committee and it will cover a wide range of issues.
The outcome of the inquiry will deem whether policy changes are required. This work is a follow up to an inquiry undertaken by the Committee shortly after the reforms were introduced by the Chancellor George Osborne in 2015. Included in the scope is:
What is happening currently in Pension market
For many people, the choice of what to do with their pension savings in preparation for retirement is one of the biggest financial decision they will ever make. This inquiry will include looking at the current situation regarding what people are doing with their retirement savings and how they chose their paths, the information and guidance available, and the way the pension product market is working.
Are people seeking enough professional advice?
Research indicates that people are making their pension choices without the taking enough professional guidance and advice, or using the support available, which increases the risk that they will not get the best value from their savings.
Market research for the Financial Conduct Authority found that early access of pension pots has become the ‘new norm’ and that most who do are not shopping around to find the best deal or product that suits them.
There is a concern that millions of retirees may be at risk of running out of money, be hit by high charges or pay additional tax as a result of poor financial advice.
Is there enough protection from potential Pension scams?
Since the new freedoms were introduced in 2015, Police data shows that over £43 million of people’s retirement savings have been lost to fraud, with the scammers even fraudulently using the Pension Regulator’s anti-scammer “kitemark”.
The Department for Work and Pensions has brought forward proposals for further anti-scam measures to try and protect the vulnerable falling victim to pension fraud.
The Committee is keen to hear of people’s experiences with scammers, and what might be done to prevent these potentially devastating losses.
What’s next for the inquiry?
The Committee has asked for written evidence and recommendations on the topics discussed above and more by Monday 23 October. This will be reviewed and a decision will be made as to whether any new policies and guidelines are needed.
The Pensions and Lifetime Savings Association (PLSA) said the inquiry was essential as the choice for consumers has increased.
To add to this, there has been a common concern that pension freedoms have encouraged consumers to access savings early leading to more ‘pensioners in poverty’ in the future.
How can we help?
As fully qualified pension advisors, at Prosperity IFA, we offer professional advice and guidance on all the options open to you and can recommend the best way forward.
We are always happy to review your current pension arrangements. If you would like to explore what the best move would be for you or want to understand the options available, talk to one of our expert Pension Advisors on 01892 300303. For more information on how we can help you, go to our website www.prosperityifa.com.