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| Pension reforms 'open door for scams' | Pension reforms 'open door for scams' |
| (about 9 hours later) | |
| Pension reforms have increased the prospect of people being conned out of their life savings, a committee of MPs has concluded. | Pension reforms have increased the prospect of people being conned out of their life savings, a committee of MPs has concluded. |
| New rules, which came into force in April, allow people aged 55 and over to cash in their pension pots rather than take a retirement income. | New rules, which came into force in April, allow people aged 55 and over to cash in their pension pots rather than take a retirement income. |
| This new system "is not yet operating entirely as it should", the Commons Work and Pensions Committee said. | This new system "is not yet operating entirely as it should", the Commons Work and Pensions Committee said. |
| It also raised concerns about gaps in advice and charges. | It also raised concerns about gaps in advice and charges. |
| The committee said there were dangers of a mis-selling scandal if pensioners were unable to make informed choices. | The committee said there were dangers of a mis-selling scandal if pensioners were unable to make informed choices. |
| Pension changes 2015 | Pension changes 2015 |
| Scams | Scams |
| Some 204,000 people accessed pension pots in April, May and June. This was more than double the number in the same period in 2013, partly reflecting customers delaying accessing their pots until the reforms had taken place, the committee heard. | Some 204,000 people accessed pension pots in April, May and June. This was more than double the number in the same period in 2013, partly reflecting customers delaying accessing their pots until the reforms had taken place, the committee heard. |
| Annuity sales dropped to 12,000 for the same three months, compared with 90,000 in the same quarter of 2013. | Annuity sales dropped to 12,000 for the same three months, compared with 90,000 in the same quarter of 2013. |
| Some 121,000 customers had opted for cash withdrawal and 71,000 had accessed some form of product to draw income from a pension fund that remained invested. | Some 121,000 customers had opted for cash withdrawal and 71,000 had accessed some form of product to draw income from a pension fund that remained invested. |
| Making these financial decisions left many people at risk of being exploited by con-artists, the committee said. | |
| "Financial scammers are notoriously adept at reinventing themselves to take advantage of such opportunities. But this does not mean scams should be accepted as a fact of life," the committee said. | "Financial scammers are notoriously adept at reinventing themselves to take advantage of such opportunities. But this does not mean scams should be accepted as a fact of life," the committee said. |
| Criticism | Criticism |
| Another danger was the lack of suitable advice for many people approaching retirement, especially those of middle-incomes. | Another danger was the lack of suitable advice for many people approaching retirement, especially those of middle-incomes. |
| Frank Field, who chairs the committee, 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." | Frank Field, who chairs the committee, 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." |
| There was also criticism of Pension Wise, the government-backed free service which guides people through the new rules. | There was also criticism of Pension Wise, the government-backed free service which guides people through the new rules. |
| "The website is not fit for purpose. It is static, offering no opportunities for personalisation, and lags well behind many private services," the report said. | "The website is not fit for purpose. It is static, offering no opportunities for personalisation, and lags well behind many private services," the report said. |
| A government and City watchdog review into financial advice should consider whether retirees facing jargon and complex financial choices should be given two or more Pension Wise guidance sessions rather than just one. | A government and City watchdog review into financial advice should consider whether retirees facing jargon and complex financial choices should be given two or more Pension Wise guidance sessions rather than just one. |
| Pension Wise offers web and phone-based services, as well as face-to-face appointments through Citizens Advice. | Pension Wise offers web and phone-based services, as well as face-to-face appointments through Citizens Advice. |
| The City watchdog, the Financial Conduct Authority, told the committee that, in July, Citizens Advice was running at 10% to 15% of its capacity to provide face-to-face appointments. | The City watchdog, the Financial Conduct Authority, told the committee that, in July, Citizens Advice was running at 10% to 15% of its capacity to provide face-to-face appointments. |
| The committee also concluded: | The committee also concluded: |
| "Freedom to choose is not enough, people must have freedom to make informed choices," the report said. | "Freedom to choose is not enough, people must have freedom to make informed choices," the report said. |