Govt to tighten guidance rules for accessing pensions

Govt to tighten guidance rules for accessing pensions

The Department for Work and Pensions plans to require providers of workplace pensions to signpost guidance whenever savers look to access or transfer their pots.

FTAdviser understands the regulations will require trustees and managers of occupational schemes to present taking pension guidance as a “natural” part of the process when looking to access or transfer a pension.

At the point in which a saver indicates they would need to take guidance, providers will be expected to incorporate booking an appointment with Pension Wise into the process.

According to the DWP, these proposals follow successful trials which found people were more likely to get guidance when their provider explained the nature and purpose of Pension Wise and booked an appointment on their behalf.

Pensions minister Guy Opperman said: “I want taking guidance to become a natural part of the journey savers embark on when making decisions about their pension pots.

“These measures will advance the government’s goal of ensuring that people have the necessary support and information to make informed choices about their financial futures.”

As well as encouraging people to use Pension Wise, the DWP said these proposals will help protect savers from scams as they will be able to make more informed decisions.

But, Stephen Lowe, communications director at Just Group, said these proposals were “not good enough”.

He said: “It is telling that Guy Opperman has revealed in Parliament that he will not set any targets for the success of these proposals to boosting guidance appointment numbers. That means there will be no yardstick against which to hold the government to account.

“At best, the approach outlined by the minister will encourage a few thousand more Pension Wise appointments each year. 

“But with increasing numbers accessing pensions and fewer taking guidance or regulated advice, that will still leave hundreds of thousands of pension savers each year wide open to ill-informed decisions and scams.”

Meanwhile, he said automatically booking appointments for savers could be the way forward.

Mr Lowe added: “Automatically booking guidance appointments is a creditable way to ensure that all pension savers, regardless of how finance or pension-savvy they are, know about the free, independent and impartial Pension Wise service that can help them.”

Back in June, the House of Lords brought an amendment to the Pension Schemes Bill to make it mandatory for individuals to seek guidance from sources such as the Money and Pensions Service in certain circumstances, for example where advice is not compulsory.

But some in the industry have argued savers need to be made more aware of the difference between guidance and advice before taking either.

Research from Just earlier this month (October 15) revealed confusion as to what constitutes advice means many pension savers think they have received regulated advice when in fact they have only received guidance.

The provider polled 1,000 people over the age of 55 in August and found of those who said they had received "advice" before accessing their pension, fewer than half (49 per cent) said they had seen a regulated financial adviser.