Pensions 

Signs pension guidance is working

Signs pension guidance is working

Individuals who have used the Pension Wise service tend to have a better understanding of what they are able to do with their pension pots than those who haven't, in a sign the service is working.

The government has published the outcome of a series of true or false statements originally included in the Department for Work and Pensions' (DWP) report into user experience of Pension Wise out last year.

The eight statements centre around accessing pension pots and what individuals can and cannot do with their money.

It was found that Pension Wise users were more likely to answer the questions correctly than non-users. Users were also less likely to answer "don’t know" than those who had not sought the free guidance. 

For example, in one statement respondents had to say whether it was true or false that they cannot move a pension pot from one provider to another.

The research found that 93 per cent of Pension Wise users correctly identified this statement as false, compared to 71 per cent of people who had not used the government service.

In another question individuals were asked whether it was correct that they could not take all the money from their pension in one go.

About 40 per cent of those who had not used Pension Wise before incorrectly said that this was true, compared to a fifth (21 per cent) of the guidance users.

The report into user experience of the service also found 92 per cent of customers were satisfied with their Pension Wise experience overall, and seven in ten (69 per cent) were very satisfied. Just three per cent said they were dissatisfied. 

The majority of users (97 per cent) also said that their understanding of their options in regards to pension planning improved only one month after having their appointment. 

Pension Wise is a free to use guidance service set up by the government following the 2015 Pension Freedom and Choice reforms.

It has since been rolled into the government's new guidance body the Money and Pensions Service, which launched this year.

The eight statements and responses were as follows:

Statement (true or false)

True (%)

False (%)

 

Users

Non-users

Users

Non-users

You must start taking money from your pension as soon as you retire (false)

7

15

88

72

You can leave money in your pension pot, and arrange to take it as and when you need it (true)

86

79

8

8

You can mix the ways to take money from your pot (true)

83

79

6

7

You cannot move a pension pot from one provider to another (false)

10

15

87

71

You don’t have to buy an annuity with your pension money (true)

81

65

11

15

You can normally start taking money from your pensions when you turn 55 (true)

86

73

8

13

You must take a 25% tax-free lump sum when you access your pension pot (false)

18

18

76

67

You cannot take all the money from your pension in one go (false)

22

41

75

48

amy.austin@ft.com