Pension Wise prompts half of customers to seek advice

Pension Wise prompts half of customers to seek advice

Some 49 per cent of customers looked for advice after having a Pension Wise appointment, new research shows.

Before using the government’s guidance service, only 17 per cent of consumers had spoken to a financial adviser, tax adviser or accountant.

The survey, which polled almost 10,000 Pension Wise users and non-users for the Department for Work & Pensions, showed seven in 10 customers spoke with their pension provider after an appointment, with 87 per cent of them feeling well prepared for this.

People who had these meetings were more likely to have taken specific steps to help them make an informed decision.

These involved calculating desired retirement income, talking to pension providers, shopping around for quotes, looking into tax implications and charges, and considering investment options.

For example, following their appointment 72 per cent of customers calculated the income they needed in retirement, compared with 57 per cent of those who had only used the Pension Wise website, and 29 per cent of non-users during a similar time period.

Jessica List, pension technical manager at Suffolk Life, said the fact individuals are contacting advisers could be driven by the fact almost half of them thought Pension Wise would be able to give them a specific recommendation, which needed to be addressed.

She said: “However, if Pension Wise is helping encourage more people to take financial advice, this can only be good news.

“The service is clearly working for those who use it – it will be interesting to see if there’s any movement on ways to drive further engagement following this report.”

Overall, the vast majority of customers (94 per cent) said they were satisfied with Pension Wise and 97 per cent would recommend it to others.

The vast majority also felt confident about avoiding scams (94 per cent).

Stephen Lowe, group communications director at Just, said: “Receiving guidance is a positive experience that can help mitigate the significant, increased risks people are exposed to as a result of the introduction of pension freedoms.”

But he said the issue remained that not enough people are receiving the service.

Mr Lowe said: “Attempts to promote the service have not resulted in acceptable usage levels so a more radical approach is required.

“The government’s policy must be modified and we should learn from the success of pension auto-enrolment. It’s now time to introduce auto-enrolment into pensions guidance to ensure people receive the help and support they need.”

Last June, the Financial Conduct Authority (FCA) revealed, in its Financial Advice Market Review baseline report, that only 7 per cent of those aged over 55 plus and planning to retire in the next two years has used Pension Wise.

Mr Lowe said: “People have worked and saved hard for 40 years to build up their pensions – a 40-minute guidance session to help them decide how to make their savings work hard for another 40 years feels a wholly appropriate and proportionate policy response.”