The Financial Conduct Authority (FCA) has today proposed new rules to require pension providers to ‘nudge’ consumers to Pension Wise in order to benefit from guidance before they access their defined contribution pension savings. This includes booking an appointment with Pension Wise if the consumer wishes.
Currently, pension providers are required to signpost consumers to Pension Wise guidance and encourage them to seek appropriate pension guidance or advice to help them understand their options. However, take up of Pension Wise guidance remains low.
The FCA’s proposals mean consumers will be given a further opportunity to take Pension Wise guidance, including making the appointment arrangements for them, before they access their pension. The FCA says that this will make it easy for consumers to book an appointment while they are already engaged in a conversation about their pension. The proposals would implement a requirement set by Parliament to encourage consumers to take Pension Wise guidance.
Sheldon Mills Executive Director, Consumers and Competition at the FCA said:
“Pension Wise is a great service which helps people to understand their options when accessing their pension savings. We know that when people use Pension Wise they are happy with the service and find it helpful. However, few people are choosing to attend a guidance appointment.
“Our proposals will help to ensure that consumers get more information about the service, are further encouraged to use it and can have an appointment booked for them there and then.”
The FCA is proposing that when a consumer has decided, in principle, how to access their savings, a provider must:
- refer the consumer to Pension Wise guidance;
- explain the nature and purpose of Pension Wise guidance;
- offer to book an appointment, and where the consumer accepts the offer, book the appointment or provide the consumer with sufficient information to book their own appointment.
While Parliament has chosen not to make these appointments mandatory, there is a desire to increase take up. The paper invites additional ideas on how to increase the take-up of Pension Wise beyond this nudge at the point of access.