Hundreds of thousands of pension savers will be given a stronger push towards free guidance before they can access retirement pots from age 55, with the offer of appointments booked on their behalf.
The financial regulator the Financial Conduct Authority (FCA) said on Wednesday that from June 2022, personal pension providers must offer to book an appointment with government-backed Pension Wise, which offers people aged 50 and over with defined contribution pensions guidance on their pension choices at retirement. You can find out more about these choices in our guide Your pension options at retirement.
At present, pension providers must only inform customers that they can access free, 45-minute guidance appointments, rather than offer to book on their customers’ behalf. Read more in our article How to get advice on your pension on how and where to seek guidance and professional financial advice.
What is Pension Wise?
Pension Wise was created in 2015 alongside the introduction of so-called ‘pension freedoms’, which are designed to give people reaching age 55 greater flexibility to use their retirement savings as they wish. For example, this may involve keeping their pension invested, taking cash lump sums, buying an annuity, or income for life, or a combination of several approaches to produce a retirement income.
The use of the Pension Wise service has been gradually increasing over the past few years, with about 132,000 appointments in 2019-20, a rise of 29% on 2018-19.
Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, said: “These measures are good news and will help those who want more help with their retirement options get the support they need. Getting help and guidance at the point of planning your retirement options is really important and so any measures to ensure that people are getting that access is welcome. Over time this will really boost awareness of retirement options and the need to plan and will boost Pension Wise appointments.”
However, the government has faced criticism that there hasn’t been a strong enough push towards ensuring everyone eligible accesses the free service.
Stephen Lowe, director at retirement specialist Just Group, said: “It’s very hard to get excited about the new ‘stronger nudge’ rules when the evidence shows it is only going to have a marginal effect. What is needed is an intervention that gets people using the Pension Wise service earlier, before they call their provider to ask to take out pension cash, and one that delivers a far greater rise in numbers than the nudge.”
Pensions Minister Guy Opperman has stated that it would cost between £45 million and £80 million to automatically enrol savers in defined contribution pensions into the Pension Wise service from age 50, the age at which they are eligible for a free guidance session.
Where can you seek further help?
If you want professional financial advice on your pension opinions, you’ll need to speak to a financial advisor, as Pension Wise can only provide general guidance and not individual recommendations. Find out more in our articles How to find the right financial advisor for you.
If you think you might be interested in speaking with a pensions expert, Rest Less Financial Services is now offering our members a free Pension Health Check with a Rest Less Pensions Expert.
Have you sought help from Pension Wise on your pension options at retirement, and did you find the service they offered useful? We’d be interested to hear from you. You can join the conversation on the Community forum or post a comment below.