Pension scams and mis-selling risk from government failings

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pension pension or retirement...
pension pension or retirement...



Pension reforms - giving people more access to the cash in their pensions - have opened the door to scammers, MPs have warned. They say that in the wake of new pension freedoms, people have not been given the help they need to make the right decisions - leaving them vulnerable to scams and raising the risk of another pensions mis-selling scandal.

The warning came from the Commons Work and Pensions Committee, which has been looking into the pension reforms that came into effect in April this year - allowing people more access to their pension pots from the age of 55.

At the time the freedoms were introduced, the government also launched Pensions Wise - a service designed to ensure people had guidance if they were unwilling or unable to pay for advice on what to do with their pension.
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Scammers

The committee said the system "is not yet operating entirely as it should", which meant there were shortfalls in the advice and guidance available to people. The Pension Wise website came in for criticism, as it does not allow enough personalisation of people's circumstances. The committee said it was not fit for purpose.

It added that unless this was addressed, it left people vulnerable to scammers, saying: "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." It said that more needed to be done to inform pensioners of the risks posed by scammers.

Mis-selling

It also warned that the failings in the system opened up the possibility of another mis-selling scandal, saying: "To not provide the basis for a well-informed choice could lead to the next major pensions mis-selling scandal." It added: "We literally cannot afford another financial mis-selling scandal."

Frank Field, chairman of the committee, said: "These reforms have been in operation for six months now: it is evident that that has been long enough for the scammers to get going, working on defrauding people out of their life savings – it should be long enough for government to have published some data about how the reforms and the attendant guidance and advice are working."

Director General of the Association of British Insurers, Huw Evans, agreed that savers need much greater access to information, guidance and advice. He added: "The introduction of a Pensions Dashboard to give people easy access to information on all their pension saving is also something the industry is keen to support developing."

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