WPC launches call for evidence on options and advice in pensions freedoms inquiry

The Work and Pensions Committee (WPC) has launched the second part of its inquiry into the impact of the pensions freedoms and protection of pension savers, focusing on decisions savers make about accessing their pensions.

The first part of the three-part inquiry, which looked at pension scams, concluded taking evidence in January 2021, with particular concerns raised over the need for a pension scam tax amnesty, fragmentation of responsibility, and the treatment of pension scam warnings by regulators.

In this second strand of the inquiry, the committee has said that it is interested in hearing about the options open to people when they come to access their pensions, the advice and guidance available, and the information people need to make an informed choice about retirement products.

The call for evidence for the inquiry has outlined ten questions for respondents, such as whether there are sufficient pension options for UK savers, the potential barriers to this, and whether issues around small pots can be solved through behavioural changes.

The committee will be taking evidence throughout the first half of 2021, with a deadline for written evidence of 14 Aril 2021.

Quilter head of retirement, Jon Greer, highlighted the next stage of the inquiry as "vital", emphasising that pension freedoms gave people "unprecedented choice" in planning their own retirement, but that there are "some teething problems that need to be ironed out".

“Navigating pension options is no easy feat, and one which won’t be achieved without access to support, advice and guidance, so it is vital that there is attention in parliament on whether people have access to the support they need to make informed choices, or whether further changes need to be made," he stated.

"It’s hoped the committee will wade into debates around small pot consolidation, and recognise that the problem won’t be solved by behavioural changes or the introduction of pensions dashboards."

Adding to this, Greer stated that, with the difficult economic environment set to continue for "some time to come", the WPC should perhaps consider looking at other aspects of the pension system to see if they are working as they should in the third part of the inquiry.

"The Money Purchase Annual Allowance, for example, is a contradiction to the principles of freedom and flexibility and the committee could consider whether it is achieving the desired outcome and explore whether a general anti-abuse approach could work better than the rigid, strict approach currently employed," he explained.

The WPC has now confirmed that the third and final part of the committee’s inquiry is expected to start “later in 2021” and will look at saving for later life and what more needs to be done to help people plan and save for retirement.

In particular, this part of the inquiry will look to ask if households have adequate savings for retirement and if there are measures the government should consider to reduce the gender pension gap, and to support self-employed and gig economy workers save for retirement, as previously confirmed by the committee.

The broader inquiry, Protecting pension savers – five years on from the Pension Freedoms: Accessing pension savings, was initially launched in June 2020, and looks to explore issues around accessing pension savings and savings for later life.

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