Last month marked one year since the introduction of the stronger nudge to pensions guidance rules which aimed to increase the take up of Pension Wise guidance sessions by those accessing their pensions for the first time.
New data from the Money and Pensions Service (MaPS) analysed by wealth manager, Quilter, revealed the stronger nudge has had a lacklustre impact in its first year.
The latest MaPS figures show that the stronger nudge to pensions guidance has coincided with a 13% uptick in attendances of Pension Wise guidance sessions.
Since the stronger nudge was implemented on 1st June 2022, 105,271 appointments have been attended compared to the 92,911 attended during the same period a year earlier.
Over the same period there was a 21% increase in appointments arranged. The difference with the appointments attended reflects the fact that there was an increase in the proportion of no shows and cancellations, up from 25% to 30%.
The increase in both bookings and attendances may not be solely driven by the stronger nudge. From August 2022 face to face appointments for customers where a telephone appointment was not suitable restarted, having been abandoned from March 2020 due to the Covid pandemic.
The figures are placed into further context by Financial Conduct Authority data which show the total number of pension plans accessed for the first time in 2021/22 was over 700,000, which demonstrates that the proportion of individuals taking guidance when accessing their pension remains stubbornly low at around 16%.
Equally, the increase in take up of Pension Wise appoints could be because more people accessed their pension for the first time in 2022/23 than in a similar period in 2021/22 and we await the FCA data for 22/23 to get a clearer picture. The impact of the stronger nudge therefore looks inconclusive at best.
Where professional advice has not been sought by customers looking to access their pension pot, guidance can be invaluable. However, the limited uptake of Pension Wise sessions, despite the stronger nudge, suggests there is a disconnect that is preventing more people taking advantage of the support on offer and preferring to go it alone.
The introduction of the stronger nudge to pensions guidance alongside the new pension transfer regulations has increased the volume of Pension Wise and anti-scam appointments. This has resulted in increased waiting times for appointments with often more than a month’s wait for a Pension Wise and scam guidance sessions.
Given the Pension Wise sessions are optional, it is unlikely that many people would be willing to wait that long at a time when they have already decided to access their pension and may need the funds.
Such delays may have contributed to the apparent limited success of the stronger nudge and suggests the nudge should come much earlier to ensure people are made aware well before they have made the decision to access their savings and feel they do not have time to wait.
Jon Greer, head of retirement policy at Quilter, said:
“Guidance offers a valuable resource for those looking to go it alone when they access without advice and explain the different options available, but the stronger nudge has not provided the expected boost to the take-up of guidance sessions since its implementation a year ago.
“Our experience is that many customers looking to access their pension savings already have a good idea of the action they wish to take and often do not feel they need guidance, particularly where they have already received financial advice. However, it is worrying that so many people who do not seek advice still appear to be opting out and going ahead without support. Taking guidance at this stage in life is a long way from becoming normalised.
“While we support the stronger nudge to pensions guidance, it is clear that something needs to change in order to ensure more people get help in making what is ultimately one of the biggest financial decisions they will ever make. The limited use of such a valuable resource that has been clearly signposted suggests the stronger nudge comes too late in the process.”