UK Govt Launches Investigation Into Pension Freedoms Scheme
The UK Government introduced the Pensions Schemes Act in 2015 to give its citizens the freedom and choice in using their retirement funds. When the act was passed, a number of parties voiced their concern as there were quite a few loopholes in the Pensions Schemes Act that could be exploited by unscrupulous operators.
Some of those loopholes included pensioners being exposed to scams, becoming harder to qualify for a full pension, being hit with a huge tax bill for pension withdrawals and a limit on the pensioners annual income. The changes impacted nearly 4.5 million in the UK and after two years there have been a number of reports that UK pensioners have suffered due to the new law.
Members of Parliament and the Work and Pensions Committee have decided to launch an investigation into the pension freedoms scheme to see if pensioners have received enough education and support to prevent them from being conned by scam artists and from making poor financial decisions that hurt them in the long run.
There were concerns that pensioners could end up withdrawing a chunk of their savings and burn in on fast cars and other luxurious items. The government had established Pension Wise to educate pensioners about the pros and cons of withdrawing their pensions but recent data shows that only 7 percent of pensioners who had taken out their pension savings had availed of the free service from Pension Wise. Police data also reveals that pension savings amounting to £43 million have been lost to scams.
In a statement, Frank Field, a Labour MP said
Pension freedom and choice liberated savers to choose what they wanted to do with their own money. 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
Field who is the chairman of the committee stated that the passing of the Pensions Schemes Act had given rise to a new breed of pension crooks that look to rip pensioners off and remove their savings via scams. The committee will also look into issues that many pensioners could be subject to poverty as they are being tempted to splurge their pension savings on fancy items.
The UK government will also focus on providing better help and advice to pensioners to ensure that they benefit from the freedom they have through the Pensions Schemes Act and make the best decisions possible.
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