A Liberal Democrat-led amendment to the government's Financial Guidance and Claims bill was passed this week in the House of Lords by 283 votes to 201. It comes after HM Revenue and Customs revealed that more than £14 billion has been accessed from pension pots by the over-55s since the introduction of pension freedoms in April 2015.
The amendment voted for in the House of Lords calls for a standard provision of advice for people who are looking to transfer money out of their pension. This is because there are fears that a significant number of people could be at risk of being scammed out of their pension savings. The result follows last week's successful amendment to the same bill, which seeks to bring forward a ban on cold calling for pensions. This was passed by 253 votes to 2015. Neither of these votes are a guarantee however and do not mean that the government will necessarily act upon them. The amended bill will now return to the House of Commons to be scrutinized further.
This week has also seen the issue of pension scams and advice being discussed by the House of Commons Work and Pensions Committee. Those present included former pensions minister Baroness Ros Altmann and Sir Steve Webb as well as Michelle Cracknell who is the chief executive of the Pensions Advisory Service.
Research presented to the committee indicated that out of the 143,752 people who accessed their pensions in the third quarter of 2016, just 10% had sought advice on the matter. Baroness Ros Altmann, lauding the success of auto enrolment said that more focus must now be placed on the other end of the pensions lifecycle.
"We're not following through at the other end and automatically helping them understand how to deal with their pension savings or avoid losing them".
Sir Steve Webb said that advice is a good thing but it must come at the right time for it to be truly effective.
"Guidance is a good thing, no question of that, but guidance at the right time is a better thing."
He added: "We have to be careful we don't have mandatory guidance that's simply at a point when people have already made their minds up, and there's research evidence that most people have their minds up more than six months out from retirement."