The UK’s Financial Conduct Authority (FCA) has proposed (on May 4, 2021) updated rules that will require pension providers to “nudge” consumers to Pension Wise so they can benefit from guidance prior to accessing their defined contribution pension savings. This reportedly includes booking an appointment with Pension Wise if the consumer is interested in doing so.
At present, pension providers have to signpost consumers to Pension Wise guidance. They also need to encourage them to look for the right or appropriate pension guidance or advice so that they can better understand the different options available to them. But the take-up of Pension Wise guidance is fairly low.
The FCA’s proposals mean that consumers will be provided another chance to receive Pension Wise guidance, which includes making the necessary appointment arrangements for them before they access their pension accounts. This should make it more convenient for consumers to book an appointment while they’re taking part in a conversation about their pension. The proposals would implement a requirement established by Parliament to UK consumers to receive Pension Wise guidance.
Sheldon Mills, Executive Director, Consumers and Competition at the FCA, stated:
“Pension Wise is a great service which helps people to understand their options when accessing their pension savings. We know that when people use Pension Wise they are happy with the service and find it helpful. However, few people are choosing to attend a guidance appointment. Our proposals will help to ensure that consumers get more information about the service, are further encouraged to use it and can have an appointment booked for them there and then.”
The FCA is recommending that when a consumer has decided, at least in principle, how to gain access to their savings, a provider needs to do the following:
- “refer the consumer to Pension Wise guidance;”
- “explain the nature and purpose of Pension Wise guidance;”
- “offer to book an appointment, and where the consumer accepts the offer, book the appointment or provide the consumer with sufficient information to book their own appointment.”
Although Parliament has decided not to make such appointments compulsory, there’s still a need or desire to increase take-up. The paper welcomes other ideas on how to potentially increase the take-up of Pension Wise beyond the current “nudge” at the point of access.