Govt rejects WPC's call for automatic Pension Wise appointments

The government has rejected the Work and Pensions Committee’s (WPC) recommendation to automatically enrol pension holders into an appointment with Pension Wise before accessing their retirement pots.

In its response to the WPC’s report Protecting pension savers–five years on from the pension freedoms: Accessing pension savings, the government said that it disagreed with the proposal.

It stated that the government believed there were “significant issues” with this approach, both at the age of 50 and at the first point of access, as proposed by the WPC.

The response cited concerns over costs and that referring members to Pension Wise at the wrong time risks “a number of negative outcomes”, such as encouraging members to access their savings earlier than is appropriate.

“It is important to note that Pension Wise is just one of the pensions guidance services offered by the Money and Pensions Service (Maps),” it said.

“Maps also provides pensions guidance through its MoneyHelper pensions guidance helpline. This provides individuals of any age with guidance on all areas of UK pensions, through its phone, email, and webchat service.

“In addition to the 113,000 Pension Wise appointments attended in 2020–2021, MoneyHelper Pensions helped over 220,000 people.”

Commenting, AJ Bell head of retirement policy, Tom Selby, said: “Ensuring people have access to support, guidance and, ideally, regulated advice throughout their retirement saving is critically important.

“However, the idea that people should be automatically enrolled into Pension Wise guidance appointments came with huge risks - not least that it would cause costs to balloon and potentially create a spate of delays, cancellations and complaints if it wasn’t something the customer wanted.

“It’s also important to acknowledge that official guidance, while extremely valuable, is just one source of information for people saving, approaching retirement or taking an income.

“Rather than myopically focusing on official guidance, it makes sense to look more broadly not only at the different organisations that can help people make informed decision, but also when that guidance is provided.

“As part of this – and to support the introduction of the FCA’s Consumer Duty – policymakers need to provide greater certainty for firms over the advice/guidance boundary.

“Most providers working with non-advised customers want to provide extra help and support to savers but are restricted by fears of straying over the line into providing advice. If the FCA and government could deliver more clarity in this area then outcomes for savers could undoubtedly be improved.”

The WPC also recommended that the government sets a goal for Maps for the combined use of Pension Wise and paid-for advice, suggesting the goal should be 60 per cent, with exemption for smaller levels of savings.

However, the government also rejected this proposal, saying that it did not support the setting of a target as the decision to use advice or guidance will depend on an individual's circumstances and should be understood within context.

    Share Story:

Recent Stories

A time for fixed income
Francesca Fabrizi discusses fixed income trends and opportunities with Goldman Sachs Asset Management Head of UK Pensions Solutions, Fixed Income Portfolio Management, Henry Hughes, in our Pensions Age video interview

Purposeful run-on
Laura Blows discusses purposeful run-on for DB schemes with Isio director, actuarial and consulting, Matt Brown, in Pensions Age’s latest video interview
Find out more about Purposeful Run On

Keeping on track
In the latest Pensions Age podcast, Sophie Smith talks to Pensions Dashboards Programme (PDP) principal, Chris Curry, about the latest pensions dashboards developments, and the work still needed to stay on track
Building investments in a DC world
In the latest Pensions Age podcast, Sophie Smith talks to USS Investment Management’s head of investment product management, Naomi Clark, about the USS’ DC investments and its journey into private markets