The Work and Pensions Committee will examine the impact of pension freedoms, with the initial focus of its inquiry looking at whether savers are adequately protected from pension scams.
This is the first strand of its three-part inquiry, which looks at the impact of pension freedoms five years on.
These pension freedom rules, introduced in 2015, aimed to give people aged over 55 more control over how and when they could access their retirement savings. The broad inquiry will look at how such people are protected as they move from saving for retirement to using these pension savings.
After looking at the potential issues surrounding pension scams, the inquiry will move onto looking at accessing pension savings and saving for later life, with a call for evidence likely next year.
For this initial stage, the committee is calling for evidence from the pensions industry, consumer groups and public bodies as to whether current enforcement tools are adqueate and whether more can be done to protect savers.
The committee is seeking evidence on the current scale of this problem, the type of fraud being used, and the potential outcomes for both victim and perpetrators.
It will look at whether more can be done to prevent fraudsters operating, as well as what steps can be taken to protect savers from falling victim to these scams.
The committee pointed to recent figures from the Financial Conduct Authority (FCA) and The Pensions Regulator saying 180 people reported to Action Fraud that they had been the victim of a pension scam in 2018, losing on average £82,000 each.These groups have stated that theybelieve that only a minority of pension scams are ever reported.
The Work and Pensions Committee chair, Stephen Timms says: “The Government’s shake-up of the pensions system of five years ago will have brought new freedoms for people to plan financially for their futures.
“But on the flip side, more flexibility means more potential for the unscrupulous to take advantage and scam savers out of what will very often be their largest financial asset.
“Extra financial hardship brought about by the coronavirus pandemic also provides an opportunity for tricksters to prey on those people who may be looking to use their pension savings as a form of support.
“We know reported frauds could be just the tip of the iceberg, so the Committee is keen to better understand the scale of the pension scam problem, as well as the types of scams in operation and the role of the pensions industry and public bodies in using current powers against fraudsters. We also want to know what more can be done to prevent such scams, to halt the huge and devastating impact they have on those looking for security in later life.”
The deadline for submissions is September 9.
Responding to this announcement The People’s Pension director of policy Phil Brown says: “It’s good to see an inquiry launched into pension fraud as its impact is unusually harmful with life changing sums of money lost. Pension fraud did not begin with the pension freedoms but they have created new opportunities for scammers that we need to contain.”