Government efforts to encourage pension savers to access free ‘guidance’ appear to be failing with no significant increase in the number of people accessing these services, according to the latest FCA figures.
The regulator’s own data shows that only around one in five people accessing their DC pension for the first time in 2019/20 used the Pension Wise guidance service.
This comes after TV campaigns, improved signposting to this services and a re-design of the ‘wake-up’ packs sent to all pension savers.
An analysis of this data by retirement specialist Just Group shows that only 94,274 people, of the 434,407 who accessed their DC pensions in this time, used the Pension Wise guidance service.
It says this proportion has not increased in recent years.
Broken down by type of product, the FCA figures show that for pension pots accessed without advice in 2019-20, the proportion taking guidance was:
- 18 per cent of the 290,696 pots that were full cash withdrawals
- 26 per cent of the 70,934 pots placed into drawdown
- 18 per cent of the 21,429 pots accessed via UFPLS
- 40 per cent of the 51,348 pots used to buy annuities
Just Group communication director Stephen Lowe says: “Attempts have been made to increase guidance take-up by showing TV ads or rewriting pension letters but there has been no upturn in usage levels.
“The latest idea is the so-called ‘stronger nudge’ but we share the concerns of consumer groups that the results showed only a marginal improvement and not the dramatic shift required. Automatic enrolment into Pension Wise appointments from age 50 builds on existing successful pension policy. Once guidance becomes a normal part of the process to accessing pension benefits then most people will stick with it rather than opt out.”