The FCA has announced that pensions providers must from today give consumers a “stronger nudge” to Pension Wise guidance when they decide to access their pension savings.

Providers will be required to refer customers to Pension Wise guidance and explain the nature and purpose of this guidance.

According to the regulator, the changes will implement a requirement set by Parliament and are designed to increase the take-up of the Pension Wise service.

This service offers free and impartial guidance to consumers about the options for accessing their defined contribution (DC) pension savings.  

Self-invested pensions technical specialist at Barnett Waddingham, James Jones-Tinsley said that any move to increase people’s engagement with their pension and take advice on their next steps is “a positive thing”, but suggested the FCA’s move could have been better timed.

“The government’s move to push people aged 55 and over to take a Pension Wise appointment before drawing down their pension was a sensible first step; however, it is poorly timed and mismanaged,” commented Jones-Tinsley.

“To date, only one in 33 of those eligible have taken the appointment. If the timing of the nudge was moved earlier, before people have already made a decision and need their money to be readily available, the value of the appointment would increase exponentially. What’s more, we could learn our lesson from the success of the COVID vaccine booking system and replicate it for those in their fifties to create a smooth, streamlined appointment process.

“At a time when the cost-of-living crisis is hitting pensioners hard, making the right decisions with your money is vital. The FCA and DWP have a duty to meet people where they are, creating the best possible environment for pensioners to have a healthy and happy retirement.”

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