THE FINANCIAL Conduct Authority has issued a damning report highlighting a number of consumer-protection issues that have emerged as a result of pensions reforms introduced by former Chancellor George Osborne in 2015.

Widely known as pensions freedoms, the changes allow anyone aged 55 or over to withdraw the money saved in their workplace scheme, in whole or in parts, in order to fund their retirement as they please.

While one of the main drivers for the reform was to give savers a choice beyond having to invest in poor-value annuities, the regulator said large numbers of consumers have been withdrawing their money without taking advice as to the tax implications and in many cases have moved the cash into savings vehicles that do not have the same tax advantages as pensions.

Loading article content

David Newman, head of pensions at Close Brothers Asset Management, said the report shows that “the retirement crisis still looms large”.

Andrew Tully, pensions technical director at Retirement Advantage, agreed, noting that “two years on since the seismic changes to the pensions market were introduced, a worrying new norm is beginning to emerge”.

“Moving money from a tax-efficient pensions environment to place into other savings or investments is frankly bonkers,” he added.

The FCA, which will issue a full report into the retirement income market next year, is now considering whether additional measures need to be put in place to protect consumers. It will also look at whether savers have ended up with unsuitable investments.