MPs on Work and Pensions Committee to probe effects of pensions freedoms in new inquiry

 
Jasper Jolly
David Cameron Attends Demos Think Tank Event With Frank Field
Frank Field (left) will investigate the freedoms introduced by David Cameron's government (Source: Getty)

The influential Work and Pensions Committee has announced it will investigate the effects of pensions freedoms in a wide-ranging inquiry.

Pensioners have withdrawn large amounts of savings since the freedoms were introduced by former chancellor George Osborne in 2015, but the inquiry will look into a broad range of concerns with the rule changes.

The committee, led by Labour MP Frank Field, will scrutinise whether the changes to rules on pension pots have opened up pensioners to fraud, as well as whether an ageing population is holding back enough savings for retirement.

Field said: “Pension freedom and choice liberated savers to choose what they wanted to do with their own money. This was welcome, but as with any radical reform it important to monitor its practical effects closely to ensure it is working as envisaged.”

Read more: Happy Birthday! Two years into pension freedoms, what do people think?

He added: “I am particularly concerned that savers are more vulnerable than ever to unscrupulous scam artists. This policy must not become the freedom to liberate people of their savings.”

Other issues to be covered in the inquiry include the lack of “shopping around” by consumers taking out their pensions early, and the availability of high-quality advice for pensioners.

Industry figures broadly welcomed the move. Chris Knight, managing director, Legal & General Retail Retirement, said: “Pensions freedoms was a giant leap in the dark - so a review is well-timed and appropriate. Whilst it has done a lot of good – not least of which is raising consumer awareness about their retirement options – there is no question that pensions freedom also has its imperfections.”

The inquiry could act as a welcome prompt for the Department for Work and Pensions to bring forward planned anti-scam measures, according to Tom Selby, senior analyst at AJ Bell.

He said: “The committee’s decision to launch an inquiry into the freedoms will hopefully put a rocket up officials dilly dallying over the implementation of vital protections from scammers, including a proposed ban on cold-calling.”

A spokesperson for the Department for Work and Pensions said: “Pension freedoms give people choice over how they use their hard-earned savings, but it is important that they are aware of the risks of fraud and seek proper guidance before accessing their money.

“Alongside the guidance provided by Pension Wise our proposed new measures to ban pensions cold-calling will ensure that savers are protected from the threat of pension scammers and we look forward to working with the committee on this inquiry.”

Read more: Why pensions freedoms could be a scandal in the waiting

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