Pension freedoms leave savers vulnerable to scams

21 October 2015
In a report looking at the effect the freedoms have had since their introduction in April, the Work and Pensions Committee warns that giving people easier access to what might be their largest saving pot increases the potential for scamming.It adds that although the government and regulating bodies have focused on consumer awareness and reducing the risk of scams, more could be done - including more anti-scam publicity and stricter reporting requirements for pension providers.The free guidance service Pension Wise also comes under fire, with the committee arguing that very few people have actually used the service - indeed, the committee estimates that only one in 10 people accessing their pots had a Pension Wise session. PENSION WISEAccountability also seems to be an issue, with no research programme in place to track what the outcomes are for customers after using Pension Wise, although 90 per cent of people who used the Pension Wise service say they have been satisfied with it.'The government's reticence on publishing statistics on the effects of its pension freedom policy, a full six months after the reforms, is unacceptable,' says the report, adding that better collection and reporting of information - especially regarding Pension Wise - should 'provide some assurance that another mis-selling scandal is not on the horizon'.Malcolm McLean, senior consultant at pensions consultancy Barnett Waddingham, says extra steps to protect consumers from fraud can only be a good thing.'The level of this particularly pernicious and, for the victim, devastating type of fraud is clearly on the increase since the freedoms arrived, and must be curtailed if the credibility of the new arrangements is to be maintained.'Perhaps the police and prosecuting authorities can be persuaded to adopt a zero tolerance approach to fraudsters from now on.'Previous research suggests people are being generally cautious with their new-found freedom, rather than splurging their pension savings on frivolities.

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