Two-and-a-half years isn’t a long time in pensions. It is, however, apparently long enough for MPs on the work and pensions select committee to decide we need a full-scale inquiry into what has become of the pension freedoms.
While committee chair Frank Field is one of the more outspoken MPs in the pensions arena, I’m not sure this should be viewed simply as him trying to make a bigger name for himself.
Consumers, providers and advisers all have their own legitimate concerns about how the freedoms have played out, particularly when it comes to issues like scams and unscrupulous sharks pushing high-risk, unregulated investments held in Sipps.
Our cover story this week tries to take stock of where we have got to since the freedoms were introduced to see where the MPs might find fault or apportion praise.
On the plus side, there is a widespread recognition in the corridors of Westminster that advice is absolutely essential for so many of the major, complex decisions consumers face themselves within the new pensions environment.
Where the FCA has led with the Financial Advice Market Review, assessing the so-called advice gap and looking at how to make IFAs’ services more accessible, Field is following.
But the answer he is almost certain to find is that not enough people have had the pension advice they need. There is also little argument that while Pension Wise, particularly the experienced operators at The Pensions Advisory Service, have done the public a great service by offering impartial guidance, this avenue has also been under-utilised.
While some with the ear of Whitehall, including former pensions minister Ros Altmann, still want advice, or at the very least guidance, to be mandatory before accessing pension benefits, advisers I speak to feel a natural aversion to being forced to take on low-value clients.
So the question is, while the Government was sensible to mandate pension advice in larger cases, did it do enough to make sure there were other safeguards to balance with retirees’ rights to access their own pensions?
Two-and-a-half years is still too early to tell whether the reforms have really worked as intended. In another two-and-a-half years, all of those defined benefit transfers might have turned into empty pockets.
Or they might have turned into full ones if consumers used them to pay off existing debts or invest wisely to generate higher returns. Field can at least lay the groundwork for how we are meant to judge what’s left.
Justin Cash is editor of Money Marketing. Follow him on Twitter @Justin_Cash_1