Pensions - Articles - Stronger nudges and scam referrals to cause capacity problem


Aegon has highlighted Pension Wise may face capacity challenges to cope with a surge of new ‘stronger nudges’ and scams referrals from pension schemes and providers, prompting individuals to seek Pension Wise guidance.

 As a result of new Government regulations in the Pension Schemes Act 2021, both the FCA and DWP have been consulting on new requirements which will mean individuals can’t access their Defined Contribution pension flexibly or transfer to do so unless they have first taken guidance from Pension Wise or formally opted out from doing so. The DWP consultation closes today (3 September) and the FCA’s closed in June.

 In addition, the DWP recently consulted on requiring schemes and providers to refer certain members to Pension Wise for scams guidance before they can exercise their statutory duty to transfer (2). If when vetting the receiving scheme, the transferring scheme identifies an ‘amber flag’ around possible scam risk, the member will have to confirm through a unique identifier that they have received Pension Wise scams guidance before the transfer can proceed.

 Taken together, these two initiatives will place considerable additional demands on Pension Wise guidance services.

 Steven Cameron, Pensions Director at Aegon comments: “The Government is keen to make taking Pension Wise guidance the default for individuals accessing their defined contribution pension flexibly. It is also planning to make more use of Pension Wise guidance services to help people understand the risk of scams when seeking to exercise their statutory right to transfer, where the transferring scheme or provider detects an ‘amber flag’.

 “While both these initiatives are well intentioned, some individuals will perceive having to seek Pension Wise guidance as delaying them being able to access their pension funds. This makes it imperative that Pension Wise can cope with demand for appointments, within one or at most 2 weeks.

 “To avoid wasting member or Pension Wise time, it will be important not to nudge individuals to Pension Wise where there’s no benefit. Aegon sees no point in this nudge if the individual is already receiving advice, which will give far more comprehensive support. And there’s a case for excluding micro pots of under say £100. Unnecessary appointments will not only increase the burden on Pension Wise but will also mean additional costs for the pensions industry which funds the service.

 “We must also avoid those accessing multiple pension pots ending up with repeat nudges or multiple appointments. Schemes and providers will want the flexibility to take a streamlined approach if delivering both a stronger nudge and also requiring the individual to obtain scam guidance.

 “Figures from HMRC suggest there could easily be 25,000 individuals accessing their DC pension flexibly for the first time each quarter. While some individuals will ‘opt out’ of the stronger nudge, if obtaining Pension Wise guidance is truly to become the norm before accessing pensions flexibly, Pension Wise needs to be resourced up. That could mean putting in place cost-effective plans to be able to cope with a sharp increase in demand. If nudges and scam consultations come anywhere close to 100,000 additional appointments each year, Pension Wise might face a 50% increase compared to the 205,000 interactions recorded for 2019/20.”
  

Back to Index


Similar News to this Story

Expectations vs Reality the retirement care crisis
Fewer than one in five (17%) UK workers have factored going into care in their retirement planning. Over a third (36%) expect health and care costs to
Why plans to include pensions into IHT must be rethought
The following outlines key regulatory and legislative activity impacting on the UK personal finance, pensions and financial planning industry in the c
DB transfer complainants likely to receive no compensation
Rising gilt yields and falling asset values drive significant decline in redress for a typical DB transfer complainant

Site Search

Exact   Any  

Latest Actuarial Jobs

Actuarial Login

Email
Password
 Jobseeker    Client
Reminder Logon

APA Sponsors

Actuarial Jobs & News Feeds

Jobs RSS News RSS

WikiActuary

Be the first to contribute to our definitive actuarial reference forum. Built by actuaries for actuaries.