David Cameron has said he will keep "a careful eye" on companies' treatment of pension savers, after complaints that customers are being denied new freedoms to cash in slices of their savings.
Under government reforms which came into force in April, savers aged 55 or more are no longer required to use their pension pot to buy retirement annuities, which give them a guaranteed income for life but have been criticised for poor performance.
Instead, they have been granted the ability to cash their pot in or to withdraw the money in slices, like withdrawing funds from a bank account. Withdrawing a lump sum can have tax implications, as the first 25% of the pot is generally tax-free and the remainder subject to tax.
However, it is up to companies themselves to decide whether they want to offer the full range of new freedoms.
Friends Life has written to 1,300 savers who asked to withdraw a chunk of their cash, to apologise and tell them it cannot offer them this option.
Instead, savers are being told they can cash in the whole pot - which could leave them with a hefty tax bill - use the fund to buy an annuity or transfer their money to another company.
Friends Life said it was planning to offer partial withdrawals "in due course", but was currently focused on requests for full withdrawal.
Asked, during his visit to Germany for the G7 summit, whether he was concerned about companies' failure to offer the full range of freedoms, Mr Cameron said: "Well, I think we need to look carefully at what's happening, and I can see my new pensions minister, Ros Altmann, is quite rightly already out of the traps and talking about this.
"The aim of the reforms is to give people more control over their money, not to have a new way of charging people. And we need great transparency in our pensions industry, as we've said before, so we'll keep a careful eye on this."
Rob Yuille, manager of retirement policy at the Association of British Insurers, said: "Insurers support the pension reforms and have worked round the clock to ensure that they are implemented as smoothly as possible.
"All insurers offer full withdrawal of the pension fund as a lump sum, and most offer different options such as drawdown or lump sums.
"The options available will depend on the pension scheme and a customer's circumstances, and customers can transfer out to flexible products. This is why providers are encouraging people to contact the free, impartial Pension Wise service so they can assess their options."
Cameron to keep a 'careful eye' on pension industry
A study by MGM Advantage discovered that Portugal is the 10th most popular dream retirement destination among Brits.
You get the attractions of the sun, a more relaxed way of life, lower living costs and cheaper property. You can also benefit from pension arrangements that mean your pension rises with inflation.
And if you choose to, you can spend your time with the enormous expat population, feeling like you never left.
In the tradition of the Best Exotic Marigold Hotel, there’s a large number of people keen to move to India, partly in order to enjoy a much higher standard of living than they would be able to afford in the UK.
If course it’s important to consider that your state pension will not rise in line with inflation - so will halve in real terms during your retirement.
This part of Europe offers a great combination of some of the lowest living and housing costs on the continent, along with a more forgiving climate than the UK.
For that reason Bosnia and Herzegovina, Bulgaria, Croatia, Romania, Greece and Turkey are a big draw for retirees.
However, state pension provision varies across the region, so you will need to check whether retiring to these locations will mean your pension continues to rise in line with increases in the UK, or will be frozen when you move overseas.
Italy is a country of contrasts, so anyone planing a retirement there needs to think carefully about whether they want to call a bustling city home, or whether they would be happiest in the mountains or by the sea.
Housing tends to cost less than in the UK, and in some regions it's incredibly cheap. Living costs are also lower than in Britain, and your pension will rise in line with increases in the UK.
Canada is a big draw for British expats of all ages. This spectacular country is known for being welcoming to people from all over the world, and in many cases has no language barrier for Brits. The quality of life is high, and the cost of housing lower than in the UK.
However, you will need to factor in the fact that your UK state pension will be frozen on the day you leave, and you will need some health insurance if you want to replicate the sorts of things that are available for free on the NHS.
As with India, the Far East offers an exciting and dramatic change from life in the UK, with much lower costs, which can buy you a higher standard of living (although bear in mind your state pension will be frozen).
You will need to consider the cultural and practical differences associated with the move, but you will have the opportunity to live in one of the most exciting places in the world.
The weather, lifestyle, space, and lower cost of living means that British expats of all ages are keen to move to Australia.
Property can be a bit of a stumbling block in some areas, as prices have gone up so much. The currency is also strong, which has posed some issues for those who receive their income in pounds, and there’s the fact that the UK state pension will be frozen if you move. However, if you can overcome these things, then a new life in the sun awaits.
The US offers much more affordable housing, and in many respects a lower cost of living than in the UK.
It appeals to those who don’t want to live with a language barrier, but want more space, possibly more sun, and an American Dream of their own.
There are some important things to factor in before you move, such as the additional cost of healthcare, and the exchange rate. However, one bonus is that your state pension will rise at the same rate it does in the UK.
France is close to home, and yet offers cheaper accommodation than the UK, a lower cost of living, and in many regions there’s better weather too.
Your pension will rise at the same rate it would in the UK, and at any time friends and family are just a short boat or plane ride away. It’s no wonder France is the second most popular dream destination for retirees.
It will come as little surprise that Spain tops the list - largely because it’s already the most common overseas retirement destination for Brits.
Millions of us have experienced the delights of the sun, sea, and the lower cost of living while we were on holiday in the country, so it’s hardly a shock that so many want to experience it on a full-time basis in retirement.
Huge falls in the price of property has made this a cheap place to buy, and the fact that your state pension will keep pace with rises in the UK means you’ll be able to maintain your standard of living throughout your retirement.