Govt publishes plans to 'nudge' savers towards Pension Wise guidance

The government has published a statement of policy intent on plans to “nudge” people towards taking pensions guidance to try and bolster saver protections.

The proposals, which follow successful trials, will require pension schemes to steer members towards taking Pension Wise guidance when they looking to access their pension.

The duty to record any opt outs will sit with the trustees and managers, although the regulations are expected to specify that a member stating they have received the guidance is sufficient evidence to allow a transfer or access to their pension.

The government clarified that it wants to allow trustees and managers "flexibility" in choosing a process that works best for them, clarifying however, that trustees and managers will be required to take "proactive steps" to facilitate appointments for members.

The Pensions Regulator confirmed that it would be introducing guidance for trustees to help implement the measures.

The trials previously demonstrated a “significant increase” in the number of savers accessing Pension Wise appointments after pension providers explained the nature and purpose of the guidance, and either offered to transfer them to the Money and Pensions Service to book an appointment, or book on their behalf.

In particular, the trials found that around 14 per cent of pension holders, who did not report having had guidance before, agreed to book an appointment, with around 11 per cent of pension holders attending a Pension Wise appointment.

The measures outlined in the statement are expected to build on these “promising results” to encourage more people who would benefit from Pension Wise, but may not otherwise make an appointment, to do so.

The ‘stronger nudge’ measures form part of a broader package designed to help people make informed decisions about their pension savings, with the proposals also expected to help protect consumers from scams.

Pensions Minster, Guy Opperman, commented: “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.”

Opperman recently confirmed that the government plans to launch a consultation on draft regulations following the newly-published statement, with regulations expected to come into force “at the earliest possible opportunity”.

This has now been confirmed in the statement for policy intent, as well as plans for a regulatory impact assessment to explore the costs to industry of implementing the stronger nudge.

However, he also previously confirmed that the government has no intention of setting 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.

Just Group communications director, Stephen Lowe, warned that the lack of targets means there will be “no yardstick” against which to hold the government to account, highlighting the proposals as “a fudge not a nudge”.

He continued: “It is exasperating because this lack of ambition condemns pension savers to years of more of the same – where they’re ushered in to pension saving through automatic enrolment but left to grope for the exit on their way out.

“It’s not good enough and will result in a significant minority of people receiving impartial guidance.

“At best the approach outlined by the Minister, will encourage a few thousand more Pension Wise appointments each year.

“But with increasing numbers accessing pensions and fewer taking guidance or regulated advice, that will still leave hundreds of thousands of pension savers each year wide open to ill-informed decisions and scams.”

Lowe stated that whilst trials may have been successful in an academic sense, they did not deliver the “real-world transformation” in Pension Wise usage required, noting that it also had less of an effect on those who were least engaged with pensions.

He added: “The tragedy is that there already is a single solution guaranteed to engage multiples more people in pension decisions that already has a proven track record and widespread acceptance among the public.

“That is automatic enrolment. People are free to opt out but very few do, resulting in millions more employees saving into workplace pensions.

“It is an obvious case of ‘doublethink’ in pensions policy where those automatically enrolled into pension saving are not automatically enrolled into pension guidance.”

Highlighting recent research from Just which showed that fewer than 4 per cent aged 45-54 with defined contribution pensions would opt out of a guidance session that had been booked for them, Lowe argued that automatic guidance appointments are a “creditable way” to ensure that all savers know about the help on offer.

    Share Story:

Recent Stories

Are current roads into retirement delivering member value?
Laura Blows explores HSBC Master Trust’s recent report, Converting pension pots into incomes, with HSBC Retirement Services CEO, Alison Hatcher.

Savings and finance at retirement
Laura Blows is joined by Claire Felgate, Head of Global Consultant Relations, UK, at BlackRock, to discuss savings and finance at retirement. Please click here for an edited write-up of the video

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. Please click here for an edited write-up of the video

Pension portfolios – the role of asset-backed securities
Laura Blows is joined by Royal London Asset Management (RLAM) head of sterling credit research, Martin Foden, and its Senior Fund Manager, Shalin Shah to discuss the role of asset-backed securities (ABS) within pension fund portfolios
Incorporating ESG into fixed income
Laura Blows is joined by TCW head of fixed income ESG, Jamie Franco, to discuss incorporating environmental, social and governance (ESG) strategies into fixed income portfolios