Freedom and choice could become the "next big mis-selling scandal" unless support offered to retirees is improved, warns a powerful group of MPs.
Reporting on relaxation of retirement regulations, the Work and Pensions Select Committee said a lack of regulatory clarity was "endangering pension savers" and branded the Pension Wise guidance service "not fit for purpose".
The MPs called for better publicity and education, to counter the increased risk of fraudsters targeting retires and for more data on savers choices to be collected, saying the current situation was "unacceptable".
The report calls for the government to "redouble its publicity efforts around pension scams".
It also shed light on the low uptake of people accessing Pension wise, the government-funded guidance service.
This comes after research from the Pensions and Lifetime Savings Association suggested just one in ten people exploring retirement options used the service.
There were complaints that the organisation did not satisfactorily publish statistics on uptake, and concerns that the guidance on offer was not tailored to meet people's needs. The report suggested a more visual approach had worked better in studies, and that savers were more comfortable using their existing providers for support.
Which? argued that getting more people to access Pension wise should be a priority, and called for a system to let providers could book customer Pension wise appointments directly.
The report found that there were "advice gaps", with customers unable to access advice or guidance to make informed decisions about how to access their savings.
Concerns were also raised about the affordability of advice. The Association of Professional Advisers director general acknowledged that the traditional model of bespoke, face-to-face advice was expensive, comparing it to Savile Row tailoring when the demand was for Marks and Spencer.
The committee recommended that the government and the Financial Conduct Authority (FCA), as part of the Financial Advice Market Review, clarify the distinction between advice and guidance.
They also recommend that the FCA published guidelines for standardised language and transparency in pricing for pensions and associated advice, to make the process less complex for both consumers and providers.
The report concludes that while the long-term implications of the changes are yet to be discovered, we can draw comparisons with the US and Australia, who have liberalised pension markets.
Just Retirement referred to analysis showing 25% of Australians who had accessed their pensions savings at 55, had exhausted their savings at 70.
Responding to the report, Hymans Robertson partner Chris Noon said it was not a surprise that pension freedom was not working as it should.
He said: "We agree that urgent improvements are needed to avoid another financial mis-selling scandal. The government needs to tackle this urgently, and should do so before introducing any further shake-ups of the pensions system."
Barnett Waddingham senior consultant Malcolm McLean agreed that the government needed more anti-scam publicity and said it should introduce stricter reporting requirements for pension providers.
He added: "The level of this particularly pernicious and, for the victim, devastating type of fraud is clearly on the increase since the freedoms arrived and must be curtailed if the credibility of the new arrangements is to be maintained."
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