Recommendation 10

HM Government Acknowledged

The Government does not support setting a goal for the combined use of Pension Wise and paid-for advice when accessing pots for the first time. However, in light of Tom McPhail’s 2021 Departmental Review of MaPS, we are encouraging MaPS to evolve the Pension Wise service and innovate to better achieve effective and efficient outcomes. In 20/21, 55% of pension pots accessed within the contract-based market, excluding those worth less than £10,000, were accessed after the use of Pension Wise or financial advice. From 1 June 2022, new Regulations implementing a Stronger Nudge to pensions guidance (the Occupational and Personal Pension Schemes (Disclosure of Information) (Requirements to Refer Members to Guidance etc.) (Amendment) Regulations 2022) will be in force. These Regulations will require pension schemes to offer to book a Pension Wise appointment on behalf of the member (or other relevant beneficiary), when they seek to access, or transfer with the intention of accessing, their defined contribution benefits. Trials showed this will further increase the take up of Pension Wise guidance. The FCA are bringing in corresponding rules implementing a Stronger Nudge to pensions guidance in the contract-based market. The government does not support setting a target proportion of members utilising advice or Pension Wise guidance. The decision to use advice or guidance will depend upon individuals’ circumstances and should be understood within context. This decision will be affected by, for example, an individual’s levels of financial literacy, the other sources of information and guidance they may have utilised, and the makeup of their pension savings. We are committed to ensuring individuals have the support and information they need to make informed choices about their financial futures, striking the right balance between providing vital protections for pension savers, while also giving them freedom and choice over how they use their hard-earned savings.