Stephen Lowe: “It’s not good enough for guidance to remain as a sideshow.”
A series of behavioural trials run in conjunction with pension providers has resulted in an increase in Pension Wise use but the results are just a “starting point” for more work on the issue.
The research – which tested two different ways of signposting the Pension Wise service – found about 11% of people used the guidance service within the next six weeks. This compared to 3% of customers in the control group.
The research was conducted by the Behavioural Insights Team on behalf of the Money and Pensions Service (Maps). It tested two potential routes when customers asked about accessing their workplace pensions – either offering to make a Pension Wise appointment for them or transferring them the service directly to arrange a meeting.
Aviva, Hargreaves Lansdown and Legal & General Investment Management took part in the trials.
The experiment was conducted after the Financial Guidance and Claims Act 2018 Parliament acknowledged that there was a need to encourage people to seek guidance in a way that engages them and ministers committed to testing different approaches.
Maps said the results would help inform the Department for Work and Pensions and the Financial Conduct Authority when it comes to future regulations and rules.
Maps head of pension policy and strategy Carolyn Jones said the results were positive but just a “starting point”.
“More work should be done to explore the practicalities of making these trial approaches the standard – and then we need to build on them.
“There remains a large proportion of people accessing their retirement savings without taking guidance or advice. We need to develop a greater understanding of who these people are, and whether they face significant detriment as a result, if we are to identify the best way to support everyone’s financial wellbeing as they head into later life.”
Group communications director at Just Group Stephen Lowe said the two concepts tested masked the magnitude of improvement needed to ensure the majority of pension savers got the right support.
“It’s not good enough for guidance to remain as a sideshow – it needs to be the main event. Nearly a million people are set to hit 55 this year alone and gain access to their pension savings.
“The FCA needs to be more ambitious about implementing measures that deliver a meaningful change. A guidance session must become a routine step for those accessing pension cash, with only a small minority opting out. Adopting either of the concepts tested would be too timid,” said Lowe.
Rob Yuille, assistant director, head of long-term savings at the Association of British Insurers said the results echoed the outcome of the ABI’s Future-proofing of Pensions report released earlier this year.
He added: “Many people access their pension pots without receiving regulated advice or guidance – getting expert help needs to become the norm.
“These trials show that stronger prompts to guidance can work for some customers, but additional measures are needed, including more support earlier in life, more accessible advice, and a shift in the regulatory boundary so that Maps and providers can offer more support to customers making retirement decisions.”