DWP promises 'stronger nudge' to pensions guidance

The DWP is set to "nudge" more DC pension savers to get guidance from Pension Wise - the government consumer help service - when they near taking pension benefits. Following a trial which showed a nudge had some benefit in encouraging take up, the DWP will ask DC schemes to encourage members to get pension guidance. However it appears unlikely that DC pension savers will be automatically ‘opted-in’ to guidance, a decision likely to mean most pension savers will still not receive guidance. The move has already attracted criticism, with some calling it a “fudge not a nudge.” The DWP says its trial demonstrated a "significant increase" in the number of savers accessing a Pension Wise appointment when pension providers explained the nature and purpose of the guidance, and then either offered to book a Pension Wise appointment, or transferred them to the Money and Pensions Service who booked the appointment. The 'Stronger Nudge' measures have been outlined today in a Statement of Policy Intent. Pensions Minister Guy Opperman said: "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. "As well as encouraging people to use the service, the proposals will help protect consumers from scams." The DWP says the “Stronger Nudge” measures are part of a package to help people make "informed decisions" about accessing their pension savings. Demand for the Pension Wise service has grown every year since its launch in 2015, according to the DWP. In 2019/20, the Money and Pensions Service delivered over 200,000 Pension Wise 'interactions', including telephone appointments, face to face appointments and online sessions, three times the number delivered in the service’s first year. However the 'nudge' move has been branded as too little to make a significant difference. Stephen Lowe, group communications director at retirement specialist Just Group, said: “This is a fudge not a nudge. 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 is telling that (pensions minister) Guy Opperman has revealed in Parliament that he will not set any targets for the success of these proposals to boosting guidance appointment numbers. “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.” Recent research by Just Group found that fewer than 4% of pension savers – 1 in 25 people – aged 45-54 with defined contribution pensions would opt out of a guidance session that had been booked for them. Mr Lowe has written about his concerns on pension guidance in Financial Planning Today, voicing worries that without an automatic opt-in to pension guidance there would be little change and many pension savers would miss out on essential advice, make poor decision and be vulnerable to scams. However some were more positive. David Fairs, executive director of regulatory policy, analysis and advice at The Pensions Regulator, said: "We welcome the DWP’s Stronger Nudge as another key step to help ensure savers make informed retirement choices by using the free guidance available from Pension Wise. We will be introducing guidance for trustees to help implement the measures so that seeking guidance becomes the norm for pension savers when planning for the future."

DWP promises 'stronger nudge' to pensions guidance

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