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Retirees need more help managing pensions, MPs warn

Savers 'trapped in a web of complexity' as Government helpline fails to live up to expectations.

Article originally published by The Telegraph. Hargreaves Lansdown is not responsible for its content or accuracy and may not share the author's views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest.

Savers 'trapped in a web of complexity' as Government helpline fails to live up to expectations.

Retirees need more help with their pensions to stop them making bad decisions and the Government should step up its role in the space, an influential group of MPs has said.

Savers should be automatically signed up for a meeting with the free Government guidance body, the Money and Pensions Service, both when they reach age 50 and when they dip into their pensions for the first time, a report has said.

The work and pensions select committee, a cross-party group of MPs, criticised the Government for having done too little to make sure savers received adequate guidance.

The Money and Pensions Service was set up in 2015 after rule changes allowed savers to spend their pensions as they wish, known as "pension freedoms". It was told to ensure six in 10 retirees received some form of free guidance before cashing in savings however just 14pc of eligible Britons did so.

Stephen Timms, chair of the committee, said the Government had been too “timid” in promoting the free service. He warned current efforts did not go far enough and Britons were financially worse off as a result.

He said: "Without intervention to drive up the numbers receiving advice and guidance, savers will keep making poor decisions – and, in far too many cases, become scam victims. The pension freedoms, far from living up to their name, have trapped people in an increasingly confusing web of complexity."

Pension freedom rules allow people to divert their retirement savings into cash by taking out as much as they want from the age of 55. But the greater choice has meant savers take on all the risk and responsibility of managing their money.

Nearly three quarters of those who used the free Government service changed their mind about what they would do based on the guidance they were given. Sir Hector Sants, of the Money and Pension Service, added: "This tells you that the vast majority of people, left to their own devices, will probably make a poor decision."

The City watchdog, the Financial Conduct Authority told the MPs pensions were a "minefield". From June this year, it will force pension firms to refer savers to the Money and Pensions Service, explain its purpose and offer to book an appointment.

David Fairs, of the Pensions Regulator, said that nudging savers towards guidance would not be enough. “The Government and regulators can no longer just sit on their hands as decision making becomes ever more complicated,” he said. However, he criticised the MP's idea of automatic appointments, warning many would not turn up.

Guy Opperman, the pensions minister, said: “This Government is committed to ensuring people across the country have the necessary support and information they need to make informed choices about their financial futures.”

This article was written by Jessica Beard from The Telegraph and was legally licensed through the Industry Dive publisher network. Please direct all licensing questions to legal@industrydive.com.


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    Article originally published by The Telegraph. Hargreaves Lansdown is not responsible for its content or accuracy and may not share the author's views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest.

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