Less than a quarter of over 55s who had started accessing their pension took advantage of the government's free, independent and impartial guidance service Pension Wise, the Financial Conduct Authority has revealed.
Fewer than one in five retirement savers aged over 55, and who accessed a defined contribution pension in the last four years, had a telephone or face-to-face appointment with Pension Wise, according to the FCA.
The FCA’s Financial Lives research for 2022 showed 18 per cent of retirees had a Pension Wise session, compared with 15 per cent two years previously.
Pension Wise was set up in 2015 to give savers specialist support when making decisions about how best to access their pensions.
Stephen Lowe, group communications director at Just Group, said that the FCA research showed a higher proportion of people knew about Pension Wise but that had not translated into noticeably higher usage.
“The majority of people know it exists but we’ve yet to see a take-off in terms of usage, especially of the one-on-one phone and face-to-face sessions with a trained specialist that are the most valuable parts of the service,” he said.
Irreversible decisions
“Pension Wise gets rave reviews – 88 per cent of those who used the service said it helped them decide what course of action to take. It doesn’t seem right that so many people are making irreversible decisions about how to use their pension savings, without getting some guidance.”
The FCA figures showed 13 per cent of those accessing pensions had a telephone appointment with a Pension Wise specialist and five per cent a face-to-face appointment. The numbers may reflect a switch to telephone appointments when face-to-face sessions were halted during the pandemic.
A further one in five said they used the Pension Wise website. The remaining 63 per cent said they did not use the service or were not aware of it.
Just said the latest FCA figures suggested the introduction of a 'stronger nudge' requirement in July 2022 - which had required pension members wishing to access or transfer a pension to be offered a Pension Wise appointment - has not been effective.
MPs on the work and pensions select committee had recommended the government go further by setting a target of 60 per cent in the proportion of individuals using the service and trialling ‘automatic appointments’ to set up a guidance session unless the member opted out.
Pensions and financial advice
“We are still waiting to see the impact of the ‘stronger nudge’ but the results from the trial suggest the approach will prove to be too timid,” added Lowe.
“We think most pension savers should be having an appointment, especially those who are vulnerable or do not have access to financial advice. We need to see a transformation in the proportion having a session.
“The government keep rejecting proposals to test the impact of an automatic appointment pilot. But they and the FCA are pursuing no other meaningful activities to drive up Pension Wise usage. They’ve given up and are out of ideas as the data from the FCA illustrates. Should we conclude they appear content that pensions savers do not mitigate the risks they face."
“People often struggle with the complexity of pension decisions. We all have a duty to help consumers and it remains a scandal that many of those who can benefit most from a guidance session are not getting one.”
