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Pension assets can be notoriously confusing and tricky to manage given their complexity and rules which change from scheme to scheme. To address these issues, the government set up Pension Wise in 2015 to offer impartial guidance to people who may have a multitude of questions.
On this, the government will now take further steps to ensure people engage with crucial pension guidance wherever possible.
Following successful trials, occupational pension scheme members will be steered towards taking Pension Wise guidance when they seek to access their pensions.
The trials performed by the Department for Work and Pensions (DWP) reportedly demonstrated a significant increase in the number of savers accessing a Pension Wise appointment when pension providers explained the nature and purpose of the guidance and then either offered to book a Pension Wise appointment, or transferred them to the Money and Pensions Service who booked the appointment.
Measures outlined in today’s Statement of Policy Intent will build on these results, encouraging more people who would benefit from Pension Wise, but otherwise wouldn’t have made an appointment, to do so.
Guy Opperman, the Minister for Pensions and Financial Inclusion, provided the following comments along with the announcement: “I want taking guidance to become a natural part of the journey savers embark on when making decisions about their pension pots.
“These measures will advance the Government’s goal of ensuring that people have the necessary support and information to make informed choices about their financial futures.”
Additionally, while encouraging people to use the service, the proposals will also help people protect themselves from scams.
The “Stronger Nudge” measures are part of a package designed to help people make informed decisions about accessing their pension savings.
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This announcement comes just as the Mr Opperman was pushed on the issue in Parliament.
Christian Wakeford, the Conservative MP for Bury South, recently asked Mr Opperman when new Pension Wise measures would be introduced.
Guy responded with the following: “We will be publishing a statement of policy intent shortly which will set out how we plan to implement the stronger nudge (Section 19 of the Financial Guidance and Claims Act) for occupational pensions.
“Following this, we will consult on draft Regulations which will come into force at the earliest opportunity.
“We are working closely with the FCA who will consult on rules for personal and stakeholder pensions, which will also come into force at the earliest opportunity.”
In a follow up question, Mr Wakeford asked Guy for what take-up targets the government would be perusing in launching the new plans and Mr Opperman’s response unveiled surprising insights: “We want to increase awareness of Pension Wise guidance, present taking guidance as a natural part of the customer journey, and make it easier to book an appointment.
“Based on the results of the stronger nudge trials, we would expect that implementation of the nudge would lead to an increase in the take up of Pension Wise guidance. We do not intend to set a “target for the number of Pension Wise guidance sessions, or the number of members accessing pension savings in a given period who receive Pension Wise guidance. We will continue to monitor the use of advice and guidance when accessing pension savings, and take further action to encourage their use if appropriate.
“This is part of a number of measures aimed at increasing awareness of Pension Wise, which includes advertising campaigns and engagement with employers both nationally and locally.”
As the government doesn’t have plans to set a target, it may be difficult to objectively measure the plans success rate in the coming months.
It should also be noted pensioners have more than just Pension Wise when it comes to seeking guidance.
Impartial guidance can also be sought from Citizens Advice, the Money and Pensions Service and the Money Advice Service.
Additionally, legislative and up to date coronavirus changes for pensions and other financial assets are regularly being updated on the government’s website.
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