The Financial Conduct Authority will develop rules to encourage people to seek guidance before accessing their pension pot.
A letter from Baroness Peta Buscombe, the parliamentary under-secretary of state for pensions, to Labour peer Lord Bill McKenzie revealed the FCA would be developing its rules to encourage more people to take guidance.
The letter outlined how the outcome of trials, carried out by the Money and Pensions Service, on how to strongly nudge people into taking guidance before accessing their pensions pot could lead to the FCA developing its rules on guidance.
The letter stated: “Following a procurement process, Maps will shortly be signing a contract with a prominent and respected behavioural research agency who will work on the detailed design of the trials to be conducted this year.
“Following the publication of their evaluation report on the trials, the FCA will be developing their rules for a strong nudge to guidance for personal pension schemes."
The letter also confirmed Maps would be working with the FCA, the Department for Work and Pensions and The Pensions Regulator to find out how to encourage people to take pensions guidance.
Maps, which was made up of the merger of Pension Wise, the Money Advice Service and The Pension Advisory Service, officially launched in April 2019 and is a joined-up service for all financial guidance.
Baroness Buscombe confirmed the new service will continue to delegate certain functions to other organisations and in 2019-20, Maps will invest in this service.
This will result in:
- 60,000 more pensions guidance sessions, to a total of 290,000 sessions under the Pensions Advisory Service brand;
- 35,000 more pension freedoms sessions, to a total of 205,000 sessions under the Pension wise brand;
- 85,000 more debt advice sessions, to a total of 560,000 sessions; and
- 5,000 more money guidance telephone calls, webchats or emails, to a total of 170,000 under the Money Advice Service brand.
At a listening event in London last week (June 20), Maps asked various stakeholders across the industry for their opinions on how the service can improve the guidance it gives to individuals and how it can encourage people to engage with their savings.
It also asked what it should spend its £190m budget on and how to best distribute its resources.
A common theme across the room was that the body needed to communicate with individuals about their pension savings across key stages of their life, for example, when entering work for the first time or reaching retirement age.
Another suggestion was for Maps to provide targeted pensions guidance for people aged 50, although some thought a better suited age for this would be 55.
Tailored guidance for people in this age bracket could help people focus on how to manage their pension pots in the best way, some respondents stated.
Others believed that rather than targeting those approaching retirement, Maps should focus its resources on educating the younger generation to get them engaged with their pension from an early age.
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