MPs call for 'opt out' pension guidance

Pension savers seeking to access cash should receive guidance unless they take an active decision to ‘opt out’, the Work and Pensions committee has recommended.

Related topics:  Retirement
Rozi Jones
12th December 2017
Houses house of parliament commons government govt gov
"They will no longer be able to opt-out of guidance through the inertia of not wanting to make a decision."

Unveiling its recommendations for the Financial Claims and Guidance Bill, MPs on the Work and Pensions committee called for pension savers to receive guidance unless they “expressly refuse” before being allowed to access pension cash.

Just has welcomed the proposals which it says will encourage greater take-up of free and impartial pension guidance.

Stephen Lowe, group communications director at Just, said: “Evidence presented to the committee in recent weeks has convinced them that take-up of pension guidance is far too low and that a stronger nudge is needed.

“Amendments to the Bill have already been proposed, but this recommendation goes a step further to make people actively declare either they have received guidance or that they have actively chosen not to receive it. They will no longer be able to opt-out of guidance through the inertia of not wanting to make a decision.

“Pensions are complex and we know that although people want to do the right thing, often they are scared of doing the wrong thing. In the same way that automatically enrolling people into pensions has seen participation rise rapidly, automatically giving people a guidance appointment will encourage far greater take up and lead to better outcomes.

“A common argument it that some may see it as an imposition or barrier to getting cash and, if they really think that that free and impartial guidance is not for them, they could still opt out.

“However, our own recent research into those who have accessed pension money makes us think that it would be warmly welcomed by the majority – three in four agreed taking guidance should be a requirement, rising to nine in 10 of those who had actually had a guidance appointment.

“The pension reforms were a bold policy leap and now we need to be bold and confident too because most pension savers will value the extra help and support making complex decisions around retirement.

“We fully support the committee in its recommendations that the Government should create default guidance on pension freedoms in order to promote shopping around, better-informed decision-making and protection against scams.”

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