Pension reforms ‘run risk of new mis-selling scandal’
The Government has set up a Pensions Wise service, which offers a 45-minute guidance session in person or over the telephone
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.Another financial mis-selling scandal is looming, this time over the pension freedoms launched in April, an influential committee of MPs warns today.
“These reforms have been in operation long enough for the scammers to get going, working on defrauding people out of their life savings,” said Frank Field, chairman of the Commons Work and Pensions Committee. He said the Government must provide data on how the reforms are working and close gaps that have become apparent.
People aged 55 and over have the right to take their retirement savings as cash. But fears are rife that many attracted by the chance to get at the money now will not consider the implications for their later years, or be aware of the tax charge, as only a quarter of a pension pot can be taken tax-free.
“Good quality, co-ordinated and accessible guidance and advice will be the best tools to ensure people make the best, informed decisions about their retirement savings, and protect them from scammers,” said Mr Field.
In one case reported last week by the Pensions Regulator, hundreds of people lost out when pension scheme members were cold-called and offered cash incentives to have their savings transferred out of the scheme into potentially better investments.
Mr Field said: “We have seen all too clearly, too many times, what happens when financial information is not properly provided and regulated. We literally cannot afford another financial mis-selling scandal.”
Malcolm McLean, senior consultant at the pension actuaries Barnett Waddingham, called for “a zero tolerance approach to the fraudster”, pointing out: “The level of this particularly pernicious and, for the victim, devastating type of fraud is clearly on the increase since the freedoms arrived and must be curtailed.”
The Government has set up a Pensions Wise service, which offers a 45-minute guidance session in person or over the telephone, as well as offering information online on cashing in a pension pot early. However, the committee said take-up of Pension Wise has been “lower than many anticipated”. It wants pension firms to provide “stronger signposting” to the service.
Tom McPhail, head of retirement policy at Hargreaves Lansdown, said: “The tracking by public bodies of investor behaviour, decision-making and outcomes has so far been inadequate.”
This particularly pernicious fraud is clearly on the increase
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments