Out-Law News | 31 Jan 2022 | 4:03 pm | 1 min. read
The UK Department for Work and Pensions (DWP) has announced plans to promote and facilitate access to pensions advice.
The “stronger nudge to pension guidance” measures, which will come into force on 1 June 2022, will require occupational pension schemes to give customers guidance as a routine and offer to book a Pension Wise appointment for the individual, unless they wish to opt out of receiving guidance.
Pension Wise is a government service that provides free, impartial, guidance to help individuals aged 50 and over consider the options for accessing their defined contribution (DC) pension.
The change comes after a consultation launched in July 2021 by the DWP found that increasing the take-up of guidance would also help protect consumers from pensions scams, increasingly driven by fake websites and online adverts.
The government said the measures built on ongoing work with industry, regulators and law enforcement partners to “pursue fraudsters, close down the vulnerabilities they exploit, and make sure people have the information they need to spot and report scams.”
The latest data from the Office of National Statistics (ONS) shows pension saving has remained resilient throughout the pandemic, with total membership of occupational pensions up 7% on pre-pandemic levels. This includes an increase of 13% in private sector defined contribution membership.
Minister for pensions and financial inclusion Guy Opperman said: “We want guidance to be available to savers when making decisions about accessing their pension pots. These new measures support savers and further this government’s commitment to ensuring people across the country have the necessary support and information they need to make informed choices about their financial futures.”
Tom Barton, pensions and savings expert at Pinsent Masons, said: “This change to the rules around pensions advice, coupled with measures introduced late last year to reform the processes around scam checks, has made the procedure for pension transfers more complex – and also impacts on the transfer process itself.”
“Clearly the aim is to promote good decision making, steer people away from decisions they may come to regret and dial down the risk of scams. That’s important to protect members – and also to protect schemes and providers from the risk of future claims. Where schemes and providers have robust and compliant processes they should be in a good place and protecting their members too,” Barton said.
“However, given some uncertainties around precisely what the compliance processes actually are right now, this is a really difficult area for schemes and providers. As to the guidance, it will be interesting to see whether members pay heed to the warnings they receive and call off transfers in any volume,” he added.
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