Pension Wise could benefit from a shift from optional nudges to auto-enrolled appointments, Just Group has suggested, warning that low take-up of guidance risks storing future problems for retirees facing complex financial decisions without support.

Just Group pointed to the Financial Conduct Authority’s (FCA) Financial Lives 2024 research released last week, which showed that 59 per cent of retirement savers who accessed a defined contribution (DC) pension in the past four years didn’t use the guidance from Pension Wise.

Just Group’s analysis of the research showed that there was a rise in the number of people having a telephone conversation with a Pension Wise specialist, from 13 per cent in 2022 to 20 per cent in 2024.

However, it also found that the number of people having a face-to-face conversation remained the same at 5 per cent between 2022 and 2024, while website use declined from 20 per cent in 2022 to 18 per cent in 2024.

Its analysis revealed that the number of retirement savers using Pension Wise increased from 35 per cent in 2022 to 40 per cent in 2024.

Meanwhile, 59 per cent said they had not used or were not aware of it, down from 63 per cent in 2022.

Just Group group communications director, Stephen Lowe, said: “More than a decade on from the reforms, a large majority of people are still accessing pensions without any professional support.

“While the numbers using guidance are rising, progress remains glacial. Around a million DC pensions are likely to be accessed this year, hundreds of thousands without professional help.

“Pension Wise gets rave reviews – user surveys have shown 88 per cent of those who used the service said it helped them decide what course of action to take.

“Better signposting through providers and employers, and revised ‘wake-up’ packs to highlight the service have been introduced.

“In July 2022, the ‘stronger nudge’ requirement requiring pension members wishing to access or transfer a pension to be offered an optional Pension Wise appointment.”

Lowe explained that Just Group believe that the majority of pension savers could benefit from having an appointment with Pension Wise, especially those who are vulnerable or do not have access to financial advice.

He suggested a way to “boost numbers to more meaningful levels” would be to emulate pension saving, where employees are automatically enrolled into pensions with an opt-out option.

“The idea of auto-enrolling people into Pension Wise appointments – with an opt-out option for those it is unsuitable for – should at least be tested to see if it can shift the needle meaningfully,” he continued.

“We shouldn’t underestimate how often people struggle with the complexity of pension decisions.

“It is a scandal that, more than a decade on from the pension ‘freedom and choice’ reforms and introduction of guidance, take-up is so low that it raises concerns about what problems are being stored up for the future.”

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