Providers to book pensions guidance sessions from June

According to rules published by the Financial Conduct Authority on Wednesday, pension providers will need to put in place stronger nudges towards guidance in as little as six months’ time.

Providers are currently required to signpost consumers to Pension Wise and encourage them to seek appropriate pensions guidance or advice to help them understand their options. However, take-up of Pension Wise guidance remains low.

Under the new rules, when a consumer has decided how they wish to access their pension savings or transfer rights providers must first refer them to Pension Wise.

They must explain the nature and purpose of Pension Wise guidance and then offer to book a Pension Wise appointment.

Should the consumer accept the offer, the provider must book the appointment or provide them with sufficient information to book their own appointment.

The FCA also said providers must record whether the saver declined the offer to receive guidance, received guidance, or went on to receive regulated advice.

The watchdog noted that while there was broad support for the proposals, around half of respondents to a consultation thought the nudge to Pension Wise guidance comes too late in the journey, when savers would have already made up their mind about how they wish to access their pension savings. 

There were concerns savers could see the stronger nudge as a barrier to accessing their pensions and that this could lead to an increase in complaints.

However, the FCA said the Financial Guidance and Claims Act 2018 required the nudge to be delivered as part of and before proceeding with the application process.

The regulator stated: “The earliest and most consistent point in our rules when the application process is first triggered is when a consumer makes a decision in principle about how they wish to access their pension savings. 

“While the nudge may come too late in the consumer pensions journey for some, the trigger is as early as we can make it while complying with the requirements of the act.”

Stephen Lowe, director at Just Group, said: “Calls for a small trial of a system that automatically books guidance sessions for key groups from age 50 have fallen on deaf ears, despite it being the most credible idea to boost guidance use.

“Government needs to stop rationing the Pension Wise service and take the only big idea on the table and run a trial.”

Providers will also be required to nudge savers to guidance at the point they transfer a pension with the aim of accessing their savings. The nudge can either be provided by the transferring or receiving scheme.

The City watchdog added that it will start work in early 2022 to look at additional ways it can support consumers.

It stated: “This will consider the pensions guidance needs of consumers more holistically at different points in their pensions journey, including in the run‑up to accessing their pension savings.”

This article originally appeared on FTAdviser.com