Figures from HMRC have revealed that, 159,000 people have accessed £1.7bn flexibly from their pension pots since April 2016. This means a total of £6bn has been accessed by 772,000 since the reform was introduced in April 2015.
However, this declaration of success comes against a backdrop including a warning from MPs that the new pension reforms could become the next mis-selling scandal and a BBC Panorama special shining a light on the growing number of unregulated companies which are reportedly taking advantage of new freedoms by encouraging savers to invest their money unwisely.
When Osborne lifted the lid on one of the most dramatic pension reforms in recent times, he effectively created a system whereby those retiring no longer have to buy an annuity to provide a fixed, regular income. Rather, each can have access to 100 per cent of their pension pot – and then decide what to do with it.
The episode of Panorama, first shown on 11 July, met victims whose retirement plans had been “destroyed”, heard from experts about how to spot the warning signs and watched one “scam” unfolding from beginning to end.
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In an official statement, Simon Kirby, economic secretary to the Treasury, said that it is “only right” that people should have a choice over what they do with their money, and added that the new figures show pension freedoms continue to be a “popular choice”.
“Our pension reforms have already given hundreds of thousands of people access and responsibility over their hard-earned savings and we will continue to make sure that the pension freedoms work well for everyone.
“We will work with our partners, such as Pension Wise and the Department for Work and Pensions, to ensure consumers are protected and that there is clear information to help people understand their options.”
Alongside the statistics, the government also announced plans to “protect consumers” by capping early exit fees. In May it was suggested savers withdrawing money from pensions could face a maximum exit charge of one per cent. The Financial Conduct Authority (FCA) revealed that 670,000 savers had encountered charges of up to ten per cent.
The government has yet to reveal what the final cap will be, but is extending freedoms further to allow “millions more people” to sell income from annuities from April 2017 – provided there is agreement from the annuity provider.
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