Pension Minister Guy Opperman’s failure to accept calls from MPs yesterday to push ahead with trials of automatic enrolment into pension guidance leaves outstanding problems that are likely to need more Parliamentary time to solve in the future.
Stephen Lowe, group communications director at retirement specialist Just Group, said MPs speaking in the Westminster Hall debate had expressed concerns about the lack of government action to address low and falling levels of use of the free, impartial Pension Wise guidance service.
“It showed the strength of support among MPs for testing how automatic booking of Pension Wise appointments could deliver the increase in usage that everybody agrees is needed to protect consumers from poor outcomes,” he said.
Conservative MP Nigel Mills, who called the debate on take-up of guidance and advice, said it was regrettable the Minister has not yet endorsed such a trial, and predicted that MPs would be forced to return to the issue in the future.
In his debate opening, Mr Mills said: “If we don’t trial any of these things we will be sat here in a few years’ time with more people having suffered detriment and we will then be scrabbling around for ideas how to do things but won’t have the evidence for them because we didn’t trial them in the first place.”
And summing up: “I’m sure we will see some progress when the new (stronger nudge) rules come in on June 1st and I certainly hope that they solve the problem. But I fear it won’t and look forward to next time that we’re here debating this and can hopefully then make some further progress that we didn’t quite get to today.”
Stephen Lowe highlighted concerns among MPs that the government was reneging on its previous commitment to make Pension Wise usage ‘the norm’. This point was picked up in the debate by Stephen Timms, the Labour MP and chair of the Work and Pensions Committee, which has called for the government to set a 60% target for take-up of guidance and advice.
Stephen Lowe said: “Mr Opperman responded to the MPs by highlighting his ambitions for the new stronger nudge rules, which offer to book a guidance appointment for pension savers. The problem is that trials showed that this approach would lift guidance usage but very modestly. During the debate a series of MPs made it clear that a far more robust policy measure would be needed if real change was going to happen.”
Among the points made by MPs:
– Nigel Mills (during his opening): “The Minister has made some welcome steps that will come into force in a few months’ time. But we also know even those steps won’t fix the problem of take-up at anything like the level we need to get to.
“If as a Parliament we don’t set the regulators a target, a benchmark, an aspiration – call it what you will – then they will flounder and go round and round in circles. I think we need to be clear and say ‘here’s where you need to get to, here’s how long you have to get there, and if you don’t get there, we in this House will have to take some different measures of our own to do that’.
“It is the unknown unknowns that are the problem here. The beauty of a pensions guidance appointment is that it gives people the chance to understand what they don’t know and gives them the chance to find out what they do want to know so they can make an informed decision.”
Mr Mills said the Work and Pension Committee’s call for evaluation trials of the automatic booking approach for Pension Wise would be a chance to test what worked. “What we are trying to work out is, if you give people an appointment…, does that get take-up higher, and does it get take-up higher in the hard-to-reach groups currently not using the guidance service.
