Looks at Pension Wise - the guidance service for people aged 50 and over with defined contribution pension savingsJump to full report >>
In Budget 2014, the Government announced that from April 2015, individuals aged 55 and over will be able to access their defined contribution (DC) pension savings as they wish, subject to their marginal rate of income tax. The changes to pension tax legislation necessary to implement this are in the Taxation of Pensions Act 2014.
The Government said it recognised that people would need help navigating the expanded range of options and therefore introduced a guidance service – Pension Wise in the Pension Schemes Act 2015, (s47). The service is delivered by Citizens Advice (face to face) and the Pensions Advisory Service (TPAS) (by phone) and via its website.
Pension Wise is targeted at people aged 50 or older with DC savings. It aims to provide tailored and independent information, free of charge. When DC pension savers indicate that they want to access their pension savings, providers must direct them to Pension Wise. (FCA, PS 14/17). In addition, as a ‘second line of defence’, providers are required to give risk warnings to those wanting to access their savings (PS 15/4).
In its October 2015 report on Pension freedom guidance and advice, the Work and Pensions Select Committee called for the publication of regular statistics on usage. There is now a Pension Wise dashboard on Gov.UK. However, in July 2017, the FCA said take-up of Pension Wise remained low:
In the interim report of its Retirement Outcomes Review, published in March 2017, the FCA said that to get the pension freedoms on a “good footing for the future” it was important that consumers got the right support when taking important and difficult decisions about their savings. It identified some potential remedies:
The Government is currently legislating to establish a new single financial guidance body to replace MAS, TPAS and Pension Wise. It will be responsible for delivering debt advice, money and pensions guidance. The Financial Claims and Guidance Bill 2017-19 is currently in the House of Lords. Details of the debates so far are on the Parliament website.
For more on the pension freedoms, see Library Briefing Paper SN 6891 (September 2017).
Commons Briefing papers SN07042
Author: Djuna Thurley