PENSIONS could become the next mis-selling scandal if stronger support is not offered to consumers taking up the new retirement freedoms, MPs warned yesterday.

The work and pensions committee said that the scheme introduced in April was “not yet operating entirely as it should” and a lack of clarity is “endangering pension savers.”

It said: “To not provide the basis for a well-informed choice could lead to the next major pensions mis-selling scandal.”

Improvements to guidance and advice are crucial to the success of the policy, the committee said.

It urged the government to do more to highlight the dangers of pension scams to consumers.

The new freedoms give people aged 55 and over greater choice on how they use their pension pot.

A free guidance service, Pension Wise, was introduced alongside the reforms but was described as “not fit for purpose” by the committee.

The service offers a one-off 45-minute guidance session in person or over the telephone, as well as offering information online.