A new inquiry into the 2015 pensions freedom and choice reforms has been announced by The Work and Pensions Committee.

The inquiry will assess whether the reforms are achieving their objectives and whether policy changes are required, following up on the first inquiry in 2015 shortly after the reforms were introduced.

The government said the inquiry has a 'wide scope' and will look at what people are doing with their retirement savings and how they make those decisions, the information and guidance available, and the way the pension market is working.

One of the major concerns about the new freedoms is the potential for scams – fraudster target people thinking about moving their pension pots.

Police data shows that more than £43million of people's retirement savings has been lost to fraud since the policy was announced, with some scammers even fraudulently using the Pension Regulator's anti-scammer kitemark.

The Committee has asked for written evidence and recommendations on a number of topics, by Monday 23 October, including: what are people doing with their pension pots?; Is there adequate monitoring of decisions?; Are people taking advice?; Will the pensions dashboard help consumers make informed decisions?; Is Pensionwise working?; Is there sufficient product competition in the market?; Are the government and Financial Conduct Authority taking adequate steps to prevent scamming?; and are the reforms part of a coherent retirement strategy?

The Pensions and Lifetime Savings Association (PLSA) said the inquiry was essential as the choice for consumers has increased.

"The freedom for people to spend their pension pots is a good thing, but the choices are now harder," said Graham Vidler, PLSA director of external affairs.

"Alongside the FCA's retirement outcomes review, we see this announcement of a Work and Pensions Committee inquiry as critical to making the market work in the interests of consumers."

Jon Hatchett, partner at Hymans Robertson, warned that pension freedoms have encouraged consumers to access savings early and expressed concern that it would lead to more 'pensioners in poverty' in the future.

He said: "Unless action is taken now, there's worse to come over the next decade or two – it is vital savers get the right advice if they are to avoid poor financial outcomes when they retire."

First published 28.09.2017

Lindsay.sharman@wilmingtonplc.com