Peers: pension reforms will make "PPI scandal look like a children's tea party"

Politicians have criticised firms for denying savers access to their pensions, with pensions minister Ros Altmann warning that they have "no excuse".

Related topics:  Retirement
Rozi Jones
10th June 2015
Houses house of parliament commons government govt gov

Lord McFall, a former chairman of the Treasury committee, told peers yesterday that "rip-offs were taking place daily", while Lord Hughes of Woodside warned the reforms would make the "PPI scandal look like a children’s tea party".

The pensions industry has been accused of being needless complex, and ministers have urged firms to clearly explain all charges.

Speaking to the Daily Mail, Ros Altmann said: "No matter which pension provider you saved with, you should be able to use your pension how you want to."

Harriet Baldwin, economic secretary to the Treasury, added:

"We have legislated to allow pension schemes to override their previous narrow rules, so they can offer the flexibilities if they want to.

"This means that there is no excuse for firms to claim that their rules mean you can’t access your money."

TUC General Secretary Frances O’Grady added:

“The government was warned that rushing in so-called ‘pension freedom’ risked causing chaos in which savers would be the losers. We need government action to stop people being hit with rip-off charges that eat up their retirement savings.

“There should be a thorough review to examine the impact of George Osborne’s ill-thought experiment with Britain’s pension pots.

“Savers must have access to good value, high quality retirement income options, not simply to be left alone to fend for themselves in a free-for-all.”

Industry experts have also raised concerns about the implementation of the reforms, with Nigel Green, CEO of DeVere Group, describing the freedoms as “alarmingly chaotic”.

Green added:
 
“This chaos is evidenced by the fact that only a small fraction of pension providers confirmed that they will be in a position to offer unlimited access in April. It is clear that many pension companies have existing systems that perhaps will struggle to cope with adapting to the new rules.
 
“Others, it could be argued, might have the required systems in place but will drag their feet because allowing lump sum withdrawals means a loss of business."

Friends Life has already reversed its decision to offer flexible drawdown, stating that it could no longer offer flexible drawdown because of the "older and complex nature" of its pension books, which would require "a lot of manual and time consuming work".

The industry has stressed the need for tailor-made, independent financial advice, and have warned about the lack of public awareness campaigns regarding the implications and costs of early withdrawals of retirement funds.

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