The Work and Pensions Committee is launching an inquiry into pension freedoms, looking at whether there is enough support to prevent people making financial decision they later regret or fall victim to 'scam artists'.
The committee cited police data showing £43 million in pension savings have already been lost to fraud since pension freedoms were introduced and only 7% of pensioners drawing down savings used the free service from Pension Wise for help.
In a statement the committee said the inquiry would have a wide scope. It will look at what people are doing with their retirement savings, how they decide to do it, the information and guidance available and how the pension product market works.
According to the committee, the Department for Work and Pensions has brought forward a pipeline of anti-scam measures following the news from the Pensions Regulator an anti-scammer ‘kitemark’ is being used by scammers.
The committee has asked for evidence on a series of topics including the pensions dashboard, if Pension Wise is working and if there are gaps in the advice and guidance market.
Leading Labour MP Frank Field (pictured), chair of the committee, said savers were more at risk of scams now than before pension freedoms.
‘Pension freedom and choice liberated savers to choose what they wanted to do with their own money,' Field said.
‘This was welcome, but as with any radical reform it important to monitor its practical effects closely to ensure it is working as envisaged. In this case it is vital that adequate support ensures people are equipped to ensure they don’t make decisions they subsequently regret.
‘I am particularly concerned that savers are more vulnerable than ever to unscrupulous scam artists. This policy must not become the freedom to liberate people of their savings,’ he said.
Steve Webb, director of policy at Royal London, said while the freedoms had been 'overwhelmingly positive' it was right for MPs to look at how the freedoms can be improved.
'The opportunity to get things right under pension freedoms is considerable, but savers need more help and advice to make sure that they can take full advantage of those freedoms,' he said.
In response to the Committee's inquiry, a spokesman for the Department for Work and Pensions said: 'Pension freedoms give people choice over how they use their hard-earned savings, but it is important that they are aware of the risks of fraud and seek proper guidance before accessing their money.
'Alongside the guidance provided by Pension Wise our proposed new measures to ban pensions cold-calling will ensure that savers are protected from the threat of pension scammers and we look forward to working with the committee on this inquiry.'