Select committee: Work and Pensions Committee
Recommendation 16
Fifth report - Protecting pension savers—five years on from the Pension Freedoms: Accessing pension savings
Published 18 Jan 2022
Paragraph 74
Addressed to Department for Work and Pensions
Work and Pensions Committee Protecting pension savers – five years on from the Pension Freedoms: Accessing pension savings All items in this report Report on parliament.uk ↗ Inquiry on parliament.uk ↗
Recommendation (the committee's words)
Pension Wise is a well-regarded but under-utilised service. The pension freedoms will be seen as a failure if savers make poor decisions without receiving the guidance they were promised when the freedoms were introduced. The Minister for Pensions and Financial Inclusion’s previous agreement that having a Pension Wise appointment should be “the norm” was welcome, but he has since distanced himself from this view. Neither the Minister nor regulators would tell us what they thought the usage levels of Pension Wise should be. It is clearly unrealistic to expect Pension Wise usage to be universal—some people will already have taken paid-for advice or had an earlier appointment for guidance—but that should not be a barrier to setting a stretching target for increasing take up. We recommend that the Government sets a goal for the Money and Pensions Service for the combined use of Pension Wise and paid-for advice when accessing pension pots for the first time. This goal should be at least 60 per cent and expressed in terms of individuals rather than pots. It could include an exemption for smaller levels of saving.
From: Work and Pensions Committee, Fifth report - Protecting pension savers—five years on from the Pension Freedoms: Accessing pension savings (HC 237), paragraph 74, 18 January 2022
Government response
The government responded to the whole report on 27 April 2022 (deadline 18 March 2022).
Summary written by Accountability Index from the government's response. It is not the government's own words.The government "notes" the Committee's report, commits to a call for evidence in May 2022 on occupational scheme decumulation, and declines several recommendations, including automatic Pension Wise bookings, a usage goal and annual reporting.
- On Pension Wise, the government "disagree[s] with the proposal to automatically book Pension Wise appointments", citing risks of inappropriate guidance and disengagement; it does "not support setting a goal" for combined use of Pension Wise and paid-for advice.
- It commits to a Stronger Nudge, in force from 1 June 2022, requiring schemes to offer to book a Pension Wise appointment for members accessing defined contribution benefits.
- On trust-based schemes, it says it would "not be appropriate" to introduce investment pathways-style requirements until more is known, and DWP intends to issue a call for evidence in May 2022.
- It believes an annual assessment of pension freedoms and annual reporting on pensions advice "is not necessary" at this time, but will "keep this recommendation under review".