On Monday 17th January 2022, new rules to ensure savers are fully informed of their options when seeking to access their pension pots became law.
The new measures, which will be known as the ‘Stronger Nudge to pensions guidance’, are due to come into force 1st June 2022 and will require occupational pension schemes to present guidance as a routine part of accessing pension savings. Furthermore, the schemes must arrange the booking of a Pension Wise appointment for the individual concerned, unless the individual explicitly wishes to opt-out of receiving the offered guidance.
The new regulations come into effect following successful trials and a consultation launched in July 2021 by the Department for Work and Pensions (DWP).
‘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.’
Pension Wise is a government service that provides free, impartial advice and guidance to help individuals aged 50 and over consider the options for accessing their defined contribution (DC) pension.
Upon attending a Pension Wise appointment, trained specialists explain the options available to savers, and assist them with understanding what their overall financial situation will be when they retire. Therefore, providing much-needed support to ensure the individual makes the decision that’s right for them.
How will the guidance help?
Increasing the ease of access to balanced and impartial advice should help protect consumers from pension scams, which are being driven by a rise in fake websites and online adverts.
The new measures hope to build on ongoing government relationship with industry, regulators and law enforcement partners to track down fraudsters, close down the vulnerabilities they exploit, and make sure people have the information required to spot fraudulent behaviour and avoid potential scams.
On another positive note, the latest data from the Office of National Statistics (ONS) indicates that pension saving has remained resilient throughout the pandemic, with total membership of occupational pensions up 7% on pre-pandemic levels. This is also inclusive of an increase of 13% in private sector defined contribution membership. It is likely that the introduction of stronger pension guidance will only help increase these figures.
Further detailed information can be accessed regarding the ‘Stronger Nudge’ to pensions guidance consultation here.
As always, if you would like any further information regarding the above, please feel free to contact our offices by email firstname.lastname@example.org.