LONDON (Reuters) - More than 200,000 Britons have opted to access their pension cash following the introduction of rules this year which gave them greater freedom over how they spend it.
Since April, Britons aged over 55 have been allowed to cash in their retirement fund after a requirement to buy an annuity, giving an annual revenue stream, was scrapped.
The shake-up has not lead to the spike in the number of fraud cases that critics had feared but financial advice given to consumers will be reviewed, regulators and government officials said on Wednesday.
A total of 204,581 people accessed their pensions between April and June, compared with 95,000 during the same period in 2014, according to figures from the Financial Conduct Authority (FCA).
The watchdog said most were taking cash, as opposed to transferring it to another investment, sending sales of annuities tumbling to just 12,400 over the same period, far below the 90,000 in the same period last year.
“Our data shows that take-up of the pension freedoms is high,” the FCA study said.
British life insurer companies have been forced to look for new sources of business after the reforms this year.
Data from the Association of British Insurers showed almost 2.5 billion pounds in payments have been made to savers in the April-June period.
Members of parliament’s work and pensions committee grilled the government and regulators about the reform on Wednesday, asking if consumers were being “ripped off” by criminals targetting a potential four million people who have access to pots containing thousands of pounds each.
“We are seeing activity in this area, but I don’t think it’s causing more people to come in as potential fraudsters,” FCA director of strategy, Christopher Woolard, told lawmakers.
Some 160 cases of possible pensions fraud are being considered for enforcement action, only four of which were directly linked to the pensions reform, Woolard said.
The government set up a Pension Wise website to tell the public about options and warn about scams. A fake version of the site has already been taken down.
Britain’s financial services minister Harriett Baldwin said her husband had been on the Pension Wise site to test it and he found it should be made easier to arrange face-to-face interviews.
The FCA will consult next year on whether new rules are needed on advice, especially to those with pension pots of under 30,000 pounds. Advice must be taken before tapping a pot above that amount.
The watchdog is also looking at fees, “robo” or automated advice, and commission sales on annuities, Woolard said.
Financial advisors have come under fire after a string of mis-selling scandals, but FCA officials and Baldwin told lawmakers they were happy with the advice being given so far on cashing in pensions.
Additional reporting by Carolyn Cohn; Editing by Keith Weir