Pensions could become the next mis-selling scandal if stronger support is not offered to consumers taking up the new retirement freedoms, MPs have warned.
The Work and Pensions Committee said that the freedom introduced in April is “not yet operating entirely as it should” - and a lack of clarity is “endangering pension savers”.
It said: “To not provide the basis for a well-informed choice could lead to the next major pensions mis-selling scandal”.
The new freedoms give people aged 55 and over greater choice on how they use their pension pot. Generally, the first 25 per cent of the pot is tax-free and the remainder is subject to tax. The committee described a free guidance service, Pension Wise, as “not fit for purpose”, adding: “It is static, offering no opportunities for personalisation, and lags well behind many private services.”
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.
“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.”