- MaPS research to help shape future rules and regulations
Behavioural trials to establish the best way to persuade more people to take guidance from Pension Wise before accessing their pension savings are getting under way under the leadership of the Money and Pensions Service (MaPS).
The research, being conducted by respected specialists the Behavioural Insight Team, is trying out two different approaches to directing savers towards Pension Wise when they first access their pension savings or call to discuss their options.
The trials are being carried out with three providers – Aviva, Hargreaves Lansdown and Legal & General Investment Management – to ensure a broad spread of customers.
The approaches being tested see the provider offering to book a Pension Wise appointment for the customer, and the customer being transferred to MaPS to make an appointment.
The research will cover 4,300 conversations and will test the effectiveness of these approaches against the existing signposting to Pension Wise, which is prescribed by regulations.
The evidence will help both the Financial Conduct Authority (FCA) and Department for Work and Pensions enable the delivery of the commitment made in the Financial Guidance and Claims Act 2018. This included provisions setting out a requirement for a stronger nudge towards pensions guidance at the point people apply to access or transfer their pension savings.
Jackie Spencer, Senior Policy and Propositions Manager at the Money and Pensions Service, said: “More than 9 out of 10 people who use Pension Wise are positive about their experience, but we know too many people continue to make decisions about their lifetime savings without getting any form of guidance or advice. Working out the best way to encourage people to have these conversations has the potential to change people’s lives in retirement – helping them think through all of their needs and how they will fund them.”
Lindsey Rix, MD of Savings and Retirement at Aviva, supports this move and said: “It’s becoming increasingly important that as an industry we do more to help our customers engage with their pension savings. There is more to be done to steer consumers who don’t take advice away from bad decisions. As a leading provider, we are committed to helping to deliver better support for customers. We want to work with the government and regulators to make sure this is possible within a properly regulated framework. We believe Pension Wise can also play an important role in helping customers with their retirement plans. We’re therefore delighted to be part of this important trial.
“Everything we can do to boost customers’ confidence and awareness of the retirement choices and options available to them is a positive move. Alongside other initiatives, like the Pension Dashboard, this is further evidence of collaborative work that is taking place between pension providers and industry bodies to engage customers with their savings and help them prepare for the future.”
Nathan Long, Senior Analyst at Hargreaves Lansdown, said: “Half of all retirement decisions still involve people cashing out of their pension entirely. Shifting this rather worrying trend relies on boosting the number of people getting access to quality help and guidance. This trial will help inform how the industry can play a more important role in raising the number of people using Pension Wise and crucially shed light on when people are most likely to be predisposed to getting help.”
The number of Pension Wise appointments has almost trebled since the service launched in 2015/16, rising from 61,000 in 2015/16, to 167,000 in 2018/19. There were 105,000 Pension Wise appointments during the first 6 months of 2019/20, indicating that the growth in demand is set to continue. Satisfaction with the service is high, with 95% of customers saying they were likely to recommend the guidance to others.
Notes to editors
Recent statistics on the uptake of advice and guidance
The latest stats from the FCA show that while around 645,000 pensions were accessed in the financial year 2018/19, just under half of these pensions were accessed by consumers who had not taken any guidance or regulated advice beforehand.
The Pension Wise service is designed to help people aged 50 or older with a defined contribution pension think through their options on retirement. Anyone unsure about the type of pension they have can contact Pension Wise or The Pensions Advisory Service for help.
About the Money and Pensions Service
The Money and Pensions Service vision is everyone making the most of their money and pensions. The new organisation brings together the free services delivered by the Money Advice Service, The Pensions Advisory Service and Pension Wise.
The arm’s-length organisation is sponsored by the Department for Work and Pensions, with a joint commitment to ensuring that people have access and guidance to the information they need to make effective financial decisions over their lifetime. The organisation also engages with HM Treasury, which is responsible for policy on financial capability and debt advice.
Working hand-in-hand with stakeholders throughout the UK, the Money and Pensions Service ensures that money and pensions guidance is available to those that need it, adapting to people’s changing needs throughout their lives, offering services and appointments over the telephone, online and in person where appropriate.
For further information for stakeholders, they should visit the Money and Pensions Service website www.moneyandpensionsservice.org.uk
Consumers can continue to access free guidance about their money and pensions via the following websites and help lines:
www.moneyadviceservice.org.uk 0800 138 7777
www.pensionsadvisoryservice.org.uk 0800 011 3797
https://www.pensionwise.gov.uk/en 0800 138 3944