Source · Select Committees · Work and Pensions Committee
Recommendation 1
1
Acknowledged
The Government has not acted on our recommendation to set a target of at least...
Recommendation
The Government has not acted on our recommendation to set a target of at least 60% for the combined use of Pension Wise and paid for advice when accessing pension pots for the first time. It also rejected our recommendation for a trial of automatic Pension Wise appointments, saying it would consider whether further interventions were needed, based on its assessment of the ‘stronger nudge.’ We remain concerned that the stronger nudge will not be enough to make take-up of Pension Wise ‘the norm’ and that neither DWP or MaPS have set metrics by which to judge its success, whether in terms of take-up of appointments or the effectiveness of the intervention. We are also concerned that a review in 2024, as suggested by the former Minister, will be too late given the time that it would take to trial and then implement any alternative solution. We recommend that by March 2023, DWP, the FCA and MaPS publish the metrics they intend to use for evaluating the stronger nudge. These should cover issues including take-up, the timing and the extent of behaviour change resulting from it. The evaluation should be completed no later than the end of July 2023. In addition, DWP should commission research to look at other initiatives trialled in the meantime, such as automatic appointments. (Paragraph 13) Are people saving enough?
Government Response Summary
The government is committed to monitoring the use of Pension Wise and the impact of the Stronger Nudge, using metrics such as the volume of appointments attended and FCA Retirement Income data. They will continue to gather evidence and insight to support individuals in making decisions.
Government Response
Acknowledged
HM Government
Acknowledged
The government is committed to continually monitor the use of Pension Wise which now includes the impact of the Stronger Nudge. We will continue to work with MaPS to consider feedback on users’ experience of the service and its impact on their knowledge of the options available to them. The metrics we are using to monitor the use of Pension Wise and the impact of the Stronger Nudge are set out below. To monitor take-up, we use the volume of appointments attended each quarter from MoneyHelper and compare this to periods prior to Stronger Nudge. In July-Sep 2022 there was 20% year-on-year increase in the number of Pension Wise appointments attended which will include some impact of the Stronger Nudge. We also monitor the FCA Retirement Income data which provides the proportion of DC pots accessed in the contract-based market with financial advice or Pension Wise guidance. We already consider how the market for Pension Wise is evolving and trends in the number of DC pots being accessed each year is changing. While we believe it is right for savers to be nudged towards pension guidance, the decision to receive guidance or not should be a personal one, based on individual circumstances. We also do not support the trial of a system by which members are automatically booked a Pension Wise appointment. However, we will consider all options for signposting and nudging individuals to appropriate guidance. We are committed to encouraging people to engage with pensions and plan for their retirement, including by using appropriate guidance. In most cases this will be broader guidance, such as that provided by the mid- life MOT. We are currently introducing three new Mid-life MOT initiatives which will deliver this guidance to a range of different target groups. Pension Wise provides guidance specifically about options for accessing savings through pension freedoms. It is therefore appropriate for those who are considering their options for accessing their savings but is not broad enough for most other circumstances. The Stronger Nudge effectively targets members at the point of deciding whether and how to access their savings. We are committed to gathering evidence and insight and to help support individuals to make decisions appropriate to their circumstances. The Department has recently undertaken the Planning and Preparing for Later Life (PPLL) - a nationally representative survey of 40–75-year-olds in Great Britain - which has provided evidence on how far individuals are able to make well informed decisions about how and when to retire. We published a call for evidence in June to consider the help and support members of trust- based pension schemes should receive when they want to access their pensions savings and we are considering our next steps.