Steven Cameron, Pensions Director at Aegon comments on the FCA’s Policy Statement on stronger nudges to pensions guidance published today.
Steven Cameron, Pensions Director at Aegon (pictured) says:
“The new stronger nudge will result in many thousands more people approaching retirement accessing the valuable guidance offered by Pension Wise. Making the right decision on retirement options is hugely important and people do need support. But we’re surprised and disappointed that the FCA’s new rules still require the nudge even to those who have taken advice. Ideally, many people will opt to pay for full financial advice, which will go much further than Pension Wise by offering a tailored recommendation based on personal circumstances. Nudging such individuals looks like a waste of their time and Pension Wise resource.
“While well intentioned, the stronger nudge effectively means pension providers will be telling individuals that they can’t access their pension until they have had an appointment with Pension Wise, or opted out. This makes it essential that Pension Wise can cope with an increase in demand for appointments, without delays for customers. With the introduction of nudges on 1 June, the timescales are tight particularly as Pension Wise has also just become responsible for delivering guidance ahead of transfers if the pension provider suspects a possible scam. Based on the numbers of people who’ve recently been accessing their DC pensions flexibly, if Pension Wise guidance does become ‘the norm’, they could see an increase of 50% in appointments.
“The FCA’s new rules apply to individuals in ‘contract-based’ pensions. The DWP has been also consulting on stronger nudges for those in ‘trust based’ schemes but with some key differences. The DWP is yet to publish its final rules but the FCA’s final rules show little sign of having considered adopting the DWP approach, which we saw as preferable in a number of areas. This is disappointing and with some individuals having both trust-based and contract-based pensions which they may be accessing together, lack of consistency in final rules risks confusion.”
