The Work and Pensions Select Committee is launching an inquiry into advice and guidance on pension flexibility changes.
The House of Commons committee today (16 July) will look at whether people are getting enough help navigating the “choice and flexibility” changes to pensions introduced in April this year.
The committee will look at whether people are adequately supported in making good, informed decisions about their retirement savings in light of the changes on access to pensions and pension drawdown introduced in April 2015.
The reforms, which came in from 6 April, gave people more freedom in choosing what to do with their retirement savings.
The Work and Pensions Committee is calling for written evidence on take-up, suitability, affordability and independence of the advice, guidance and information available to those approaching retirement; and recommendations for improvement.
Richard Graham MP, committee member and chairman of the all-party pensions group, said: “Taking away the requirement to buy an annuity and introducing much greater flexibility in how and when individuals can access their pension savings should be a positive change for many.
“However getting the right guidance is key, and this inquiry will look at the guidance and advice being given, and how effective the system is in helping people make informed choices.”
Frank Field MP, chairman of the committee, said: “Many constituents were ripped off in the process of putting their earnings into pension savings.
“We have a duty to ensure they are not ripped off again if they wish to take their money out and spend some lump sums.”
Patrick Connolly, financial planner at Chase DeVere, said: “This (the inquiry) would seem very sensible. It is a completely new area of advice and a market that is still developing.
“There is a fear that many will make the wrong decisions, so it makes sense to identify the potential risks as soon as possible.
“I think there is currently too much emphasis on individuals having to choose between an increasingly complex variety of options, with life changing consequences at retirement.”
Back in June, George Osborne revealed the government is set to consult on exit charges to ensure that savers are not penalised if they wish to transfer their pension scheme to access pension freedoms.
Mr Osborne said that the Treasury will consult to ensure people are treated fairly when moving their pension to one that offers the flexible options now enshrined in legislation.
In particular the consultation will look at options to address any “excessive” early exit penalties. These include, if there is evidence of such penalties, the option of imposing a legislative cap on charges for those aged 55 or over.