More than £6bn has been taken out of UK pension funds since HMRC relaxed rules relating to pensions freedom in April 2015, according to UK government figures released today.
And with so many taking advantage of HMRC’s decison to relax UK pension pot rules, including £1.7bn taken by 159,000 people in the last two months alone, investors should be extra vigilant against losing out to investment scams, according to pensions specialist AJ Bell.
In April 2015, the government introduced what it calls “the most significant pension reforms for a generation” and, in a statement released today, it revealed the full scale of the pensions exodus with payments of more than £6bn across 772,000 payments, leaving UK pension pots, since the launch of pension freedoms.
However, Tom Selby, senior analyst at AJ Bell has warned that a “spectre of scams” looms large over the massive outflows, that are being heralded by the UK government as “Britain’s pensions revolution”.
‘Opportunity for criminals’
“These figures drive home just how significant an opportunity the reforms represent for criminals,” warned Selby. “The government must do all it can to protect savers, and a ban on cold calling for pensions should be introduced as part of a serious crackdown on fraudsters.”
“This data provides the first real picture of the pension freedoms because reporting is now compulsory for all providers,” he said.
The government said that it believes that keeping their annuity incomes will be the best option for the majority of people. However, people should have the right to make the decision that is best for them according to the Economic Secretary to the Treasury, Simon Kirby.
“It’s only right that people should have a choice over what they do with their money,” said Kirby.
“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.”
Gareth Shaw, head of consumer affairs at Saga Investment Services, said that he was concerned that the government data on its Pension Wise guidance service shows that there’s a large gap between those receiving information and guidance on how to access their pension and those that are actually going ahead and using their pension freedoms.
“While the flexibility of these reforms can be liberating, they come with the real risk of running out of money,” said Shaw.
“With such a huge amount of wealth in the hands of the nation’s over 55s, help with pension planning is more important than ever. The further reforms to financial advice – including early pension access and better workplace incentives to pay for professional advice – are going to be vital to ensure that the freedom of accessing your pension how you want doesn’t go to waste.”