The DWP’s claim that the stronger nudge ‘significantly increased take-up of Pension Wise guidance’ was labelled “pure spin” (Neil Gray), while Stephen Timms said “the current policy lacks determination” and is “nowhere near enough” given “hardly anyone is using” Pension Wise currently. He concluded: “We need auto-enrolment into a service that enables better outcomes from pension savings.”
The debate is important and timely because of increasing concerns regarding the low level of impartial Pension Wise guidance usage among Defined Contribution pension savers, with latest official estimates suggesting just 14 per cent of pension pots are accessed after guidance has been used. This has led to calls for stronger approaches from consumer groups worried about savers making badly informed decisions that later impact on their financial wellbeing in retirement.
Key take outs from the hearing are highlighted below as well as a link to Hansard for the full transcript.
Stephen Timms (Labour MP): In the statement of policy intent of last week, the Department said it will implement a guidance policy based on the “Stronger Nudge trials” of the Money and Pensions Service. Those trials did show a very limited increase in appointment bookings resulting from the nudges that were tested, but it is nowhere near enough. That is why the amendment is necessary.
Auto-enrolling people to Pension Wise appointments fits the bill. Starting five years ahead of eligibility will get people thinking while they have time to reflect on their options and make their choices. An impartial session will set them on the right tracks and correct misunderstandings. Repeating the invitation each year until the appointment is taken up or is opted out of will equip savers with very important information to think ahead effectively for their financial needs in retirement.
Pension Wise is the realisation of the pension freedoms policy—the promise that was made at the time of free, impartial, high-quality guidance for those who do not use a regulated financial adviser for pensions decisions. It is the main consumer protection in the pension freedom policy—it was not an optional extra—but hardly anyone is using it. Pension Wise can be the difference between well-informed decisions leading to financial security in retirement and bad decisions, with pensions scams a real possibility. We need determination to fix that, and the current policy lacks determination.
We cannot sit back while Pension Wise continues to be an excellent service taken up by hardly anybody. The Government and regulators must end their indifference on this. Aspiring to an 11% take-up simply is not enough. We need auto-enrolment into a service that enables better outcomes from pension savings.
Neil Gray, (SNP MP): It is worth repeating the point made by the right hon. Member for East Ham that the cited MaPS stronger nudge trials showed only a very small increase in the number of people who actually went on to have a Pension Wise appointment. The DWP claimed that it “significantly increased the take-up of Pension Wise guidance.”
But, again, this is pure spin.
The hon. Member for Delyn earlier in the Committee stage said that we should look at outcomes. We agree. The outcome of the stronger nudge trials was to get people to Pension Wise appointments in less than one in ten cases. It moved them from 3% to 11%. Eleven per cent. A stronger nudge is just not going to be enough, not by a long chalk.
https://hansard.parliament.uk/commons/2020-11-05/debates/9fe5b8b6-fceb-4271-8ff1-2855d141988a/PensionSchemesBill(Lords)(ThirdSitting)
|
