Fewer than one in five retirement savers aged 55+ who accessed a defined contribution pension in the last four years had a telephone or face-to-face appointment with Pension Wise, according to the Financial Conduct Authority (FCA).
The FCA’s flagship Financial Lives research for 2022 showed that only 18 per cent of these individuals had a Pension Wise session, which was a slight increase from 15 per cent in 2020, despite efforts to encourage more people to use the service.
Pension Wise was introduced in 2015 as a vital resource to provide specialist support to consumers making complex decisions about their pension options.
But the FCA figures indicated that only 13 per cent of those accessing pensions had a telephone appointment with a Pension Wise specialist, and only 5 per cent had a face-to-face appointment. The switch to telephone appointments may have been influenced by the pandemic, which halted in-person sessions.
Furthermore, the report showed that 20 per cent of retirement savers used the Pension Wise website, while a significant portion, 63 per cent, either did not use the service or were not aware of it.
The latest FCA figures show that these efforts to promote Pension Wise didn’t work as well as expected. In July 2022, the government made a new rule, a ‘stronger nudge’, to make sure pension members get offered a Pension Wise appointment if they want to access or transfer their pension.
More action is needed, according to the Work & Pensions Select Committee. They want the government to set a goal of 60 per cent of people using Pension Wise. Additionally, they advise experimenting with “automatic appointments” to ensure that more people receive guidance sessions.
Just Group group communications director at retirement specialist Stephen Lowe says: “The majority of people know it exists but we’ve yet to see a take-off in terms of usage, especially of the one-on-one phone and face-to-face sessions with a trained specialist that are the most valuable parts of the service,” he said.
“Pension Wise gets rave reviews – 88 per cent of those who used the service said it helped them decide what course of action to take. It doesn’t seem right that so many people are making irreversible decisions about how to use their pension savings, without getting some guidance.”
Lowe adds: “We are still waiting to see the impact of the ‘stronger nudge’ but the results from the trial suggest the approach will prove to be too timid.
“We think most pension savers should be having an appointment, especially those who are vulnerable or do not have access to financial advice. We need to see a transformation in the proportion having a session.
“The government keep rejecting proposals to test the impact of an automatic appointment pilot. But they and the FCA are pursuing no other meaningful activities to drive up Pension Wise usage. They’ve given up and are out of ideas as the data from the FCA illustrates. Should we conclude they appear content that pensions savers do not mitigate the risks they face?
“People often struggle with the complexity of pension decisions. We all have a duty to help consumers and it remains a scandal that many of those who can benefit most from a guidance session are not getting one.”
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