Customers satisfied with Pension Wise, but take-up concerns remain

A recently published 2017-18 evaluation report conducted by Ipsos MORI on behalf of Pension Wise, has revealed that there is high satisfaction with the service.

Taking pension guidance needs to become a natural step in the journey from work into retirement

Stephen Lowe, Just Group

Ninety-two per cent of customers who completed an appointment with Pension Wise said they were happy with their experience of the service overall, and 69 per cent said they were very satisfied. Just three per cent were dissatisfied.

At least nine in 10 customers were satisfied with various aspects of the timing, convenience and content of their appointments. This includes the knowledge of Pension Wise guidance specialists, the clarity of the discussion and how much the service took on board personal circumstances.

Guidance boosts understanding

Ninety-seven per cent of Pension Wise customers said their understanding of their options has improved one month after their appointment.

Eighty-nine per cent said they felt well informed of their pension options one month after their appointment, compared with 54 per cent for non-users of Pension Wise.

Furthermore, three months after their appointment, 92 per cent of customers who used Pension Wise said they feel confident in their ability to avoid scams, compared with 78 per cent of non-users.

Stephen Lowe, group communications director at Just Group, stressed that guidance is invaluable, given the complexity of pensions.

“The strength of Pension Wise is not just that it gives people factual information about their pensions and choices, but that the information is impartial and delivered in a way the customer feels most comfortable with, either face-to-face or by phone,” he said.

Lowe added that it helps overcome lack of engagement and knowledge, boosting savers’ confidence when it comes to making financial decisions.

Make consumers aware

More than 1m defined contribution pots have been accessed since the introduction of pension freedoms, according to the Financial Conduct Authority’s Retirement Outcomes Review interim report.

It found that the proportion of consumers who have purchased retirement income products without using regulated advice has grown since pension freedoms.

Drawdown products bought without advice increased from 5 per cent before the freedoms to 30 per cent in 2017.

The FCA highlighted that while Pension Wise is available to provide free and impartial guidance to consumers, “take-up remains low”, noting that in the third quarter of 2016 a total of 143,752 consumers accessed their pensions but just 13,990 had a Pension Wise appointment.

However, consumers may also be accessing the information available on the Pension Wise website, with over 8m visits as at September 2018, since it was launched.

Furthermore, government data shows that Pension Wise arranged more than 63,000 face-to-face appointments, up 31 per cent from 2016-17, and more than 24,000 telephone appointments, up 37 per cent from 2016-17.

Nevertheless, Lowe raised concerns about the number of people using Pension Wise.

“Despite the rave reviews, take-up of appointments is too low and there needs to be far more robust efforts to overcome the inertia shown by non-users,” Lowe said.

Providers are currently required to make consumers aware of Pension Wise and recommend that they seek appropriate guidance or advice to help them understand their options.

“Taking pension guidance needs to become a natural step in the journey from work into retirement, basically a new social norm for all those starting to think about accessing pension cash,” Lowe noted.

He added that it is in the interests of employers and schemes to make sure members are made aware of the free and impartial guidance on offer to them, while highlighting to them “that they are losing out on important and potentially life-changing information if they fail to take it up”.

Making the single financial guidance body work

The Money Advice Service, The Pensions Advisory Service and Pension Wise is being replaced by a single financial guidance body.

Jon Greer, head of retirement policy at Quilter, said: “The government needs to put appropriate funding into the Single Financial Guidance Body… so people know where and how they can get the help they need with pensions, and sufficiently early in their overall retirement journey.” 

However, he noted that the body may not be able to cope with the anticipated demand.

Greer said: “The government needs to work more closely with employers, as they are best positioned to encourage employee engagement.”

He also highlighted the need for the government and the single financial guidance body to think about when and how savers could be nudged towards seeking suitable financial advice.