On the go: Stephen Timms, chair of the Work and Pensions Committee, has submitted an amendment to the pension schemes bill that would see savers near retirement contacted each year until a guidance appointment has been made.
The amendment stated that members should be contacted five years before retirement age with a scheduled date and time for a pensions guidance appointment, or the option to reschedule or defer this appointment.
The saver would then be contacted every year until guidance has been taken or the individual has confirmed that they would rather opt out.
Mr Timms said: “If members [...] of pension schemes have not used pensions guidance by the time they become eligible to access their pension, they will be directed to pensions guidance by the regulations from the Financial Guidance and Claims Act upon requesting access to their benefits.”
According to Mr Timms, the amendment aims to increase the use of guidance following the Department for Work and Pensions’ policy statement on October 28, which he said “ignored calls for people to be automatically enrolled to Pension Wise guidance”.
The DWP is expected to publish regulations that will require trustees and managers of occupational schemes to present taking pensions guidance as a “natural” part of the process when looking to access or transfer a pension. But it stopped short of making guidance mandatory.
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.
As well as encouraging people to use the service, the DWP said these proposals would help protect savers from scams as they will be able to make more informed decisions.
Mr Timms said: “Pension Wise offers a hugely valuable service for the pension savers who use it: nearly three-quarters of them make a different decision after having its guidance. But unfortunately, only a very small proportion of savers speak to Pension Wise.
“That leaves huge numbers of people at risk of making the wrong decision about accessing their pension savings — risking a lower-quality of life in retirement and, in the worst-case scenario, losing all of their pension savings to scammers.
“The approach the government has outlined [...] is a step forward. Even on its own evidence, though, it seems unlikely to deliver a really major increase in the numbers of people who take guidance from Pension Wise.”
The pension schemes bill will enter committee stage at the House of Commons on November 3.
This article originally appeared on ftadviser.com
