WPC seeks govt clarification on Pension Wise policy plans

Work and Pensions Committee (WPC) chair, Stephen Timms, has written to Pensions Minister, Guy Opperman, and Economic Secretary to the Treasury, John Glen, seeking clarification on the government’s plans and aims for Pension Wise.

Following an evidence hearing in the WPC about protecting pension savers five years on from pension freedoms, Timms pressed the ministers to outline the government’s view on making the use of Pension Wise guidance ‘the norm’ in writing to the committee.

Opperman had told the House of Commons that taking up Pension Wise guidance should be the norm, before clarifying to the WPC that the availability of Pension Wise should be the norm.

Timms quoted Department for Work and Pensions (DWP) minister, Baroness Buscombe, as saying: “We all want people … to make it the norm to use Pension Wise before accessing their pension” in the House of Lords in 2018.

He asked if this was no longer the DWP’s view and, if so, why its view had changed.

In the evidence session, DWP director, private pensions and arm’s-length bodies, Pete Searle, told the committee that “it would not be helpful in the department’s view” to “push” everyone aged 50 towards Pension Wise.

Timms asked the ministers to explain on what basis the department had reached this view, whether there were any plans for elements of Pension Wise appointments to be incorporated into the mid-life MOT, and whether the DWP disagreed with the view that it would be helpful for savers to think through the options before accessing their pensions well before the point of decision.

Additionally, Timms noted that it was currently not possible to identify individuals rather than holders of pension pots for the purpose of arranging automatic Pension Wise appointments or more generally for policy analysis.

He asked, “given the importance of understanding pension savings for informing government policy and the actions of regulators”, why there was no programme to address this “gap” in understanding.

During the evidence hearing, Opperman stated that primary legislation was required to trial automatic Pension Wise appointments.

Timms asked how such a trial would differ from the earlier stronger nudge trials, which did not require primary legislation.

He also wanted the calculations that found that the potential cost of automatic appointments would cost between £45m and £80m to be shared with the WPC.

Timms also sought the government’s view on the success of the Pensions Advice Allowance, whether it had any plans to amend the policy, and asked for the ministers to outline the mechanisms by which the Pensions Advice Allowance could be amended.

He asked for a response to the letter, which was sent on 25 November, by 9 December.

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