Government Rejects Automatic Pension Wise Appointments

The government has responded to the Department for Work and Pensions Department consultation paper and report on Protecting Pensions Savers Five Years on From Pension Freedoms: Accessing Pensions Savings. 

One the suggestions in the report was to suggest that pension providers must automatically book an appointment with Pension Wise for savers looking for flexible access their pensions.  The government has now rejected this suggestion.

The government suggests it cannot compel all people to have a Pension Wise when because they may not need want one or need one.

Comment

Whilst we believe having an automatic Pension Wise guidance session cannot harm given that they are free to consumers and will reduce errors made by consumers or put them in a more informed position before acting, many people will already be financially aware anyway, know what they want and will not thank you for even more guidance.  In addition, there are the costs.  Yes, it is free to the consumer, but Pension Wise is paid for by levy on the financial services industry.

Add another burden of costs on financial firms will ultimately mean firms put their fees up.

We think a ‘watered down’ version of automatic guidance calls would be more productive.  We suggest that if a pension saver has guaranteed or safeguarded rights such as a defined benefit scheme, guaranteed minimum pension rights or guaranteed annuity rates, they should automatically have a Pension Wise appointment arranged when they make enquiries to transfer away, give up guarantees and access their pension via flexible drawdown.  This will add to the requirement already to take professional advice when accessing safeguarded rights funds worth more than £30,000.