Frank Field’s first inquiry sets the tone for an ambitious chairmanship
Frank Field has only just been elected as the new chair of the department of work and pensions select committee, but he’s already busy.
Well, not really new. He first sat in the social security select committee in 1979 and served a total of 12 years between then and 1997, including a decade as chair.
He was chief scrutineer during the last big pensions change in the 1980s when then-Chancellor Nigel Lawson introduced contracting-out, effectively created IFAs and sparking a wave of misselling through the 1990s.
It is perhaps no surprise then to see Field is targeting “rip-offs” from the new pension freedoms in his first investigation as chair.
Field is a strong supporter of the reforms. He claims to have been pushing for changes prior to last year’s bombshell Budget.
But he is not unconditional in his backing and has already been firing off memos to the Treasury asking them to tighten up consumer protections.
In a May 2014 letter sent to Chancellor George Osborne, seen by Pensions Insight, Field raises concerns over high drawdown charges and the role of guidance.
Treasury minister David Gauke wrote back to effectively inform Field that nothing could be done before the freedoms were rolled out.
Last year, Field told me he was not satisfied with the response and called for further action. Now is his chance.
He is gathering evidence on the pensions industry, which has a “tendency to put its hand in the pensioner’s pocket”.
Providers have already come under fire for not being able to offer savers full flexible access to pension pots.
Field’s inquiry will surely examine the role of exit charges, fees for withdrawing cash and any other hidden or high drawdown costs.
Dame Anne Begg, who was DWP select committee chair from 2010 to 2015 before losing her Aberdeen seat to the SNP in May, backed her successor.
“We did highlight rip-offs as a big concern before the election,” she said. “During my time as chair we talked so much about the cost and charges of administering and accumulating pensions as we didn’t know he would the Chancellor pull the rabbit out of the hat [on freedoms].
“So there hasn’t been a legitimate debate on [decumulation] charges. It could be tempting for some companies to make up for the shortfall from charges at accumulation to take it out at the other end.”
With decades of experience scrutinising pension policy, Field is a force to be reckoned with and his first inquiry as chair sets the tone.