Steve Webb, Director of Policy at Royal London said: “The Pension Freedoms have been overwhelmingly positive, with many thousands of people enjoying the opportunity to use their pension savings in a way that works for them. But the Select Committee is right to look into ways that the operation of the Freedoms could be improved. Not enough people are taking advice or guidance about one of the most important financial decisions they will ever make, and there is indeed a risk of people being persuaded to hand their money over to scammers. Consumers need to be supported to shop around for the best home for their retirement savings rather than just staying with the company they have been saving with so far. There is also a concern that people are taking money out of a pension where it is growing and being invested and parking it in a low-interest cash savings account. The opportunity to get things right under pension freedoms is considerable, but savers need more help and advice to make sure that they can take full advantage of those freedoms”.
Chris Knight, Managing Director, Legal & General Retail Retirement, comments: “Pensions freedoms was a giant leap in the dark - so a review is well-timed and appropriate. Whilst it has done a lot of good - not least of which is raising consumer awareness about their retirement options - there is no question that Pensions Freedoms also has its imperfections. Consumers might have more choice about how they use their pension pot, but thousands of individuals continue to approach retirement without receiving advice or planning ahead, and as a result take the path of least resistance by sleepwalking into drawdown by default.
“We need to get people thinking about and understanding what Pensions Freedoms really means for their retirement and how they can use their pension pot strategically, not just on day one of retirement, but potentially for the next 30 years. That means encouraging, where appropriate, a blended approach which mixes the benefits of drawdown with the insurance against longevity offered with an annuity.”
“The Select Committee’s inquiry presents an excellent opportunity for the Government to address the imperfections of Pensions Freedoms, clarification of the implementation of regulation and laws around ‘Freedom & Choice’ and ultimately provide clearer pathways to consumers when it comes to making decisions about their retirement income.”
Graham Vidler, Director of External Affairs, Pensions and Lifetime Savings Association, commented: “The freedom for people to spend their pension pots is a good thing. However, the choices are now much harder for consumers. The vast majority (84%) of retirees tell us they want an income from their pension savings but there is no simple route for them to achieve this.
“Alongside the FCA’s retirement outcomes review, we see today’s announcement of a Work and Pensions Committee inquiry as critical to making the market work in the interests of consumers.”
Darren Philp, Director of Policy at The People’s Pension, said: “The “pension freedoms” have revolutionised the savings industry, but these freedoms are also fraught with danger. Whilst these freedoms have engaged some savers with a sense of ownership over their pensions, our research has shown that even when engaged many are still confused about where they can get the help they need to make the right decision.
“The Select Committee is increasingly tackling the hard questions in pensions and it is imperative that the government, regulators and the industry reflect hard on the impact of the 2015 reforms to ensure they deliver for savers.”
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