Govt urged to enact WPC recommendations 'without delay'

Industry experts have urged the government to enact pension guidance recommendations from the Work and Pensions Committee (WPC) "without delay", amid concerns that the current support for savers is "under-used and scattered".

The WPC's report into pension options and advice recommended that the government commit to trialing automatic Pension Wise guidance appointments, and set a target of at least 60 per cent to boost uptake of pensions guidance and advice.

The report has been broadly welcomed by industry experts, with Canada Life technical director, Andrew Tully, highlighting the recommendations as "laudable", although he acknowledged that the 60 per cent goal is "certainly ambitious".

"Early intervention in the decision process is key here before people have made their mind up about what they want to do with their pensions, which is reflected in the recommendation to start the process at age 50," he said.

"Hopefully more people will be encouraged to seek regulated advice when they realise how complicated the decisions around retirement planning can be.”

LCP partner and head of DC, Laura Myers, also warned that whilst the ability to take 25 per cent of the pension pot in the form of tax-free cash is perhaps the most attractive feature of a pension, far too little attention is currently given to what happens to the other 75 per cent.

"This can end up in a poor value drawdown product or, worse still, be fully withdrawn and sit in a current account or cash ISA with ultra-low returns," she said, suggesting that decoupling taking tax free cash from accessing the rest of the pension pot would help savers make much better use of their hard-earned savings.

"I’m delighted to see that the select committee has responded positively to this suggestion and call on the government to do the necessary work to see how this change could be implemented in practice," she said.

"The key recommendations of this report need to be implemented without delay”.

Adding to this, Just Group group communications director, Stephen Lowe, suggested that the recommendation to trial automatic Pension Wise appointments seemed "logical" following the success of auto enrolment.

“This is the one big idea on the table so we are pleased the committee is pushing for this more active approach to be piloted and is also calling for the government to set clear targets for take-up of guidance and advice," he said.

“The government carried out trials before deciding on its ‘stronger nudge’ plans which are due to be implemented in occupational schemes later this year, so there appears to be little to stop them trialling automatic appointments if they are serious about increasing use.

“Unless you run the trials, you will never get the data to see if it will work."

However, Hargreaves Lansdown senior pensions and retirement analyst, Helen Morrissey, warned that whilst the automatic Pension Wise recommendations would "certainly boost use and awareness of the service", there is the chance that people still decide not to take up their appointment, which could cause problems for the service.

“Another option put forward was the potential for Pension Wise to be able to offer an enhanced guidance service where it could go above and beyond going through the pros and cons of products and signposting to resources to something a bit more personalised to the individual’s needs," she added.

"This is something that would be welcomed more widely - providers have been prevented from offering such services for fear of being seen to be straying into advice.

"Being able to develop such a service could potentially really help people get to grips with their retirement options more and ensure they make good decisions.”

The Pensions and Lifetime Savings Association (PLSA) also suggested that whilst the proposals regarding a greater role for Pension Wise was good, it may not be sufficient to ensure that everyone gets good outcomes at retirement.

"We think government should go one step further, and adopt the PLSA’s Guided Retirement Income Choices proposals, which will encourage the development of a vibrant market of blended solutions and a greater role for schemes in sign-posting or offering the right solutions," PLSA director of policy and advocacy, Nigel Peaple, commented.

However, the Investing and Saving Alliance (Tisa) head of retirement, Renny Biggins, said that the group was "particularly pleased" to see the recognition that enhanced guidance and limited advice needs to be more clearly defined and industry encouraged to provide this support to the fullest extent allowed.

"And given that all pension scheme members require the same opportunities, protection and help, we fully support the proposal that all future regulatory work is undertaken jointly by Financial Conduct Authority and The Pensions Regulator unless there are clear reasons for not doing so," he explained.

"The report shines a light on many of the risks and challenges that consumers are exposed to in defined contribution pension schemes as retirement is approached and entered into.

"It is right that we continue to build on the protections that are currently in place and offer the support and tools required to provide consumers with the knowledge and confidence to make informed retirement decisions.”

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