Automatic Pension Wise appointment system cost estimated at £45m+

The government has estimated that an automatic appointment system for Pension Wise guidance would cost in excess of £45m, emphasising the importance of other initiatives, such as the simpler statement and mid-life MOT.

Speaking at a Work and Pensions Committee hearing, Pensions Minister, Guy Opperman, confirmed that introducing an automatic system for Pension Wise guidance appointments would also require change to the present legislation.

"If you wanted to do that you would need primary legislation and I think that’s a legitimate issue because you’d have to amend the present regulation," he explained.

"The potential cost would certainly be in excess of £45m, and ultimately it will be borne by levy payers unless you make it a taxation cost. You do need to consider those things when you go forward on that."

He continued: "The reason why we are so opposed to an automatic system is that it would take out all of the people who have got regulated financial advice or an independent financial adviser situation.

"It would take out some people who don't particularly want to do an effectively face-to-face appointment to our Pension Wise bases, and it would have to have a different system in relation to online as against in person."

"I don't think [automatic Pension Wise appointments are] the appropriate way, because I genuinely don't think is the right service for every single person," he added.

This was echoed by Department for Work and Pensions (DWP) director private pensions and arm's-length bodies, Pete Searle, who pointed out that Pension Wise is " focused entirely" on when someone is accessing their pension, with different approaches needed at earlier stages.

For instance, Opperman emphasised that there is a role for pension schemes in wake-up packs, whilst the government could support in the form of the mid-life MOT.

"The mid-life MOT is considerably earlier than even the wake up packs, and is definitely earlier than by the time you reach for advice and guidance when your trying to decumulate and trying to cash in your pension freedoms," Opperman continued.

He explained that by having earlier engagement with pension savings, members can have a "considered conversation" around their retirement planning, suggesting that the dashboard will also be "transformational" when introduced.

In addition to this, he suggested that simpler statements will mean that the average pension saver will be "a lot better informed about what they have, because the actual documentation provided by the provider is a lot easier to understand".

"I accept the argument in relation to advice or guidance, but it's not just those things," he said.

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