Work and Pensions Committee to probe the effectiveness of Pension Freedoms



Posted on: 3rd October 2017

Last month, the Work and Pensions Committee, decided to launch an inquiry into the effectiveness of the pension freedoms policy that came into effect in 2015, giving over-55s full flexibility over how they access their retirement cash.

Since the rules were relaxed, more than £10bn has been withdrawn from defined contribution pensions, as a lump sum, or taken as income. A recent review of pension freedoms by the City regulator found that taking pensions cash before the age of 65 had become the “new norm”, with most choosing to take lump sums rather than a regular income.

The main aim of the probe into pension freedoms, is to gauge whether any new changes are required to protect savers from, as chair of the committee, Rt Hon Frank Field MP said he was “particularly concerned” that savers were more vulnerable than ever to, as he put it, “unscrupulous scam artists”.

Are Pension Freedoms Achieving their Objectives?

The Work and Pensions Committee probe appears to have been spurred by concerns regarding the increase in scams that have been reported since the 2015 pensions freedom reforms launched.

According to police data, the reported amount of pensions savings that have been stolen or lost to fraud since 2015 amounts to some £43m. This figure has prompted the committee to call for evidence regarding the effectiveness of the freedom and choice reforms, and whether they are achieving their objectives.

Work and Pensions Committee Goals

The Committee has called for written evidence to be submitted by Monday 23 October. This will be a report on exactly what savers are doing with their retirement income, how they decide upon their chosen options, the information and guidance available and the operation of the pension product market.

Chair of the Work and Pensions Committee, Rt Hon Frank Field MP, is quoted as saying:

“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. In this case it is vital that adequate support ensures people are equipped to ensure they don’t make decisions they subsequently regret.

“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.”

What are the Work and Pensions Committee asking?

The detailed list of questions the committee has prepared include the following:-

  1. What are people doing with their pension pots and are those decisions consistent with their objectives? Is there adequate monitoring of the decisions being made?
  2. Are people taking proportionate advice and guidance and if not, why not? Are people adjusting behaviour in response to advice and guidance?
  3. To what extent will pensions dashboards enable consumers to make more informed decisions about their retirement savings? What are the remaining obstacles to their creation and success and how should those obstacles be overcome?
  4. Is Pension Wise working? If not, how should it be reformed? Are there any implications for the proposed creation of a new single public financial guidance body?
  5. Are there persistent gaps in the advice and guidance market and what might fill them? Is automated advice and guidance filling gaps as expected?
  6. Is there evidence of product market competition resulting in cheaper, clearer or a wider products for consumers? Are people switching from their pension provider in accessing their pots? Is an adequate annuity market being sustained?
  7. Are the Government and Financial Conduct Authority taking adequate steps to prevent scamming and mis-selling?
  8. Are the freedom and choice reforms part of a coherent retirement saving strategy? To what extent is it complementary to or undermined by other policies?

Haven View

In our view, the select committee is right to look into ways that the operation of the freedoms could be improved. The reality on the ground is that not enough people are taking advice or guidance about one of the most important financial decisions they will ever make. The result of this is that there is a great risk of people being persuaded to hand over their money to scammers.

Take advice! Is my advice …. Pensions Freedoms has liberated your choices, but the only way to ensure that you make safe and secure choices is to take advice.

For more impartial advice contact me at