Govt faces growing calls for automatic Pension Wise appointment trials

The government has faced further calls from MPs to push ahead with a trial for automatic Pension Wise appointments, amid continued concerns over the low member take-up of pension guidance.

Whilst new requirements for a 'stronger nudge' to pensions guidance are expected to come into force from 1 June 2022, MPs have raised concerns over the impact this will have, with government trials suggesting it could improve take-up by just 8 per cent.

Conservative MP Nigel Mills called for the debate on take-up of guidance and advice, stating that it is "regrettable" that MPs have not been able to give the government a "strong enough nudge" to change its position at this stage.

Mills also warned that without a trial, "we will be sat here in a few years’ time with more people having suffered detriment and we will then be scrabbling around for ideas how to do things but won’t have the evidence for them because we didn’t trial them in the first place".

"We will keep a watching eye on that and come back to it, because even with the stronger nudge starting in 93 days, as the minister said, we know that will not get us to where we want to be," he continued.

"Hundreds of thousands of people will still make this life-changing decision without the information they need, and without even knowing that they do not have the information that they need.

"That is not a situation that we want to see and it will inevitably lead to some people suffering detriment that they could dodge with the free, relatively quick and completely painless high-quality guidance service that is out there—a system that we put in place and wanted to become the norm. We wanted high take-up and we have not got there yet."

Work and Pensions Committee chair, Stephen Timms, who has repeatedly called for automatic guidance appointments in prior parliamentary debates, also called on the government and regulators to "end their indifference on this" issue.

He stated: "We need at least to trial auto-enrolment into a service that enables better outcomes for pensions savings. No doubt there will be difficulties but let’s at least try it out.”

Adding to this, Shadow Pensions Minister, Matt Rodda, argued that it is "quite staggering" that only 14 per cent of people are currently receiving appropriate advice from the service.

"Just imagine is that was happening with any other major financial decision that anyone makes," he continued. "In those cases alarm bells would be ringing in government ministers’ office and across the relevant sector.

“The government is taking rather small steps in the right direction, but need to do so much more on this issue. And I do hope the Minister will elaborate on these points and will reassure us that he is addressing this with the level of energy that is needed.”

The government previously estimated that an automatic Pension Wise appointment system would cost between £45m and £80m and require primary legislation, with the Pensions Minister, Guy Opperman, highlighting this as "a legitimate issue".

Opperman has instead pointed to the role of mid-life MOTs and pensions dashboards to support pension savers in relation to guidance and advice, although SNP MP, Alan Brown, said that whilst he does support these measures, they “aren’t available in the here and now whereas Pension Wise is”.

Further information on the calculations used for in the government costing estimates, and views on how a automatic pension wise appointment trial would differ from stronger nudge trials, have also been requested by the Work and Pensions Committee in light of the continued reluctance around holding such trials.

Responding to the MPs' comments, Just Group group communications director, Stephen Lowe, said: “It showed the strength of support among MPs for testing how automatic booking of Pension Wise appointments could deliver the increase in usage that everybody agrees is needed to protect consumers from poor outcomes."

    Share Story:

Recent Stories

Making pension engagement enjoyable through technology
Laura Blows speaks to Nick Hall, business development director and Chartered Financial Planner at UK-based Wealth Wizards about the opportunities that technology provides for increasing people’s engagement with pensions and increasing their retirement wealth.

ESG & DC – creating the right tools
In the latest of our series of Pensions Age video interviews Francesca Fabrizi, Editor in Chief of Pensions Age is joined by Manuela Sperandeo, Head of Sustainable Indexing EMEA, BlackRock and Mark Guirey, Executive Director, Asset Owner and Consultant Coverage - MSCI to discuss some key trends of ESG investing among UK pension funds today. Please click here for an edited write-up of the video

Multi asset credit
Pensions Age editor, Laura Blows, discusses multi asset credit with Royal London Asset Management senior fund manager, Khuram Sharih
Pensions Age podcast: buy-outs and buy-ins for member and employer nominated trustees
Pitfalls and good practice when approaching insurers with Pensions Age editor, Laura Blows, Martin Parker (Just Group) and Akash Rooprai (ITS)