Stephen Lowe, group communications director at retirement specialist Just Group, said MPs speaking in the Westminster Hall debate had expressed concerns about the lack of government action to address low and falling levels of use of the free, impartial Pension Wise guidance service.
“It showed the strength of support among MPs for testing how automatic booking of Pension Wise appointments could deliver the increase in usage that everybody agrees is needed to protect consumers from poor outcomes,” he said.
Conservative MP Nigel Mills, who called the debate on take-up of guidance and advice, said it was regrettable the Minister has not yet endorsed such a trial, and predicted that MPs would be forced to return to the issue in the future.
In his debate opening, Mr Mills said: “If we don’t trial any of these things we will be sat here in a few years’ time with more people having suffered detriment and we will then be scrabbling around for ideas how to do things but won’t have the evidence for them because we didn’t trial them in the first place.”
And summing up: “I’m sure we will see some progress when the new (stronger nudge) rules come in on June 1st and I certainly hope that they solve the problem. But I fear it won’t and look forward to next time that we’re here debating this and can hopefully then make some further progress that we didn’t quite get to today.”
Stephen Lowe highlighted concerns among MPs that the government was reneging on its previous commitment to make Pension Wise usage ‘the norm’. This point was picked up in the debate by Stephen Timms, the Labour MP and chair of the Work and Pensions Committee, which has called for the government to set a 60% target for take-up of guidance and advice.
Stephen Lowe said: “Mr Opperman responded to the MPs by highlighting his ambitions for the new stronger nudge rules, which offer to book a guidance appointment for pension savers. The problem is that trials showed that this approach would lift guidance usage but very modestly. During the debate a series of MPs made it clear that a far more robust policy measure would be needed if real change was going to happen.”
Among the points made by MPs:
Nigel Mills (during his opening): “The Minister has made some welcome steps that will come into force in a few months’ time. But we also know even those steps won’t fix the problem of take-up at anything like the level we need to get to.
“If as a Parliament we don’t set the regulators a target, a benchmark, an aspiration – call it what you will – then they will flounder and go round and round in circles. I think we need to be clear and say ‘here’s where you need to get to, here’s how long you have to
get there, and if you don’t get there, we in this House will have to take some different measures of our own to do that’.
“It is the unknown unknowns that are the problem here. The beauty of a pensions guidance appointment is that it gives people the chance to understand what they don’t know and gives them the chance to find out what they do want to know so they can make an informed decision.”
Mr Mills said the Work and Pension Committee’s call for evaluation trials of the automatic booking approach for Pension Wise would be a chance to test what worked. “What we are trying to work out is, if you give people an appointment…, does that get take-up higher, and does it get take-up higher in the hard-to-reach groups currently not using the guidance service.
“If we don’t trial any of these things, we will be sat here in a few years’ time with more people having suffered detriment and we will then be scrabbling around for ideas how to do things but won’t have the evidence for them because we didn’t trial them in the first place.”
Emma Hardy: “I would love the Minister to take away from this the need to push the FCA, to say actually we want you to firm up what exactly are you going to do. When are these trials going to take place and when are you going to have a deadline for designing them? Because it feels like they are offering warm words and not much concrete action.
“I think a firm and clear message from government to regulators to get on with these trials would help get this situation moving more quickly.”
Stephen Timms: “Government and regulators need to end their indifference on this. We need at least to trial auto enrolment into a service that enables better outcomes for pensions savings. No doubt there will be difficulties but let’s at least try it out.”
Alan Brown: “When industry and all these bodies are saying there should be a trial of auto appointments, it’s not controversial and it is something the government should actually embrace. It was the Conservative government that set up the Pension Wise system as a complementary service to the pensions freedom legislation, then it surely makes sense that the government want to ensure that as many people as possible do access impartial advice.
“The government’s approach to non-advised savers seems to inhabit a space somewhere between ‘fingers-crossed it will be ok’ and ‘if savers stuff it up it’s their own fault’.”
He said of the Minister’s focus on ‘stronger nudge’, mid-life MOTs and Pensions Dashboard: “These are measures I do support but these aren’t available in the here and now whereas Pension Wise is.”
Matt Rodda: “First of all we should acknowledge, seven years on from their introduction, whilst increased pension freedoms have brought greater flexibility, they have also resulted in a potential greater degree of risk.
“Most people only make a decision about their pension on this scale once in their lives and it is quite staggering only 14% of people are receiving appropriate advice from the service. Just imagine is that was happening with any other major financial decision that anyone makes. In those cases alarm bells would be ringing in government ministers’ office and across the relevant sector.
“The government is taking rather small steps in the right direction, but need to do so much more on this issue. And I do hope the Minister will elaborate on these points and will reassure us that he is addressing this with the level of energy that is needed.”
Nigel Mills (summing up): “Even with the ‘stronger nudge’… there will still be hundreds of thousands of people making this life-changing decision without the information they need and without even knowing that they don’t have the information they need. That is not a situation that we want to see and will inevitably lead to some people suffering detriment that they could dodge with a free, relatively quick and completely painless high quality guidance service. A system that we put in place, that we wanted to become the norm, we wanted to see high take-up of and we haven’t got there yet.”
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