The FCA says providers will be required to do all they can to encourage savers to get guidance from the government-backed Pension Wise service.

The latest retirement data shows that only 14% of consumers accessing a DC pension pot for the first time have used Pension Wise. Trials have shown that a stronger nudge for consumers can significantly boost take up of Pension Wise guidance.

The FCA and the Government have stopped short of making pension guidance compulsory and a call for an ‘auto-appointment’ with Pension Wise(now part of MoneyHelper) for pension savers at age 50 has been ruled out for now.

Instead all pension savers will from 1 June be “strongly nudged” to get guidance and make an appointment with Pension Wise or an equivalent.

The final rules on pension guidance have been published today in FCA Policy Statement PS21/21.

In its policy paper the FCA said: “We think that providing consumers with better information to equip them to make decisions is central to achieving good pension outcomes. Since the introduction of the Pension Freedoms, we have introduced a number of requirements on pension providers to help consumers make decisions about which option – or options – to choose when accessing their pension savings. Implementing the stronger nudge to Pension Wise guidance, is a further step in improving the consumer pensions journey.”

As part of the new rules, from 1 June pension providers will be required to give customers a stronger nudge to Pension Wise when they decide to access their savings. The FCA says the changes will make it easier for consumers to book a free Pension Wise appointment.

Providers, including SIPP operators, will be required to:

• refer customers to Pension Wise guidance

• explain the nature and purpose of Pension Wise guidance

• offer to book a Pension Wise guidance appointment “in most cases”, or provide customers with information to help people who want to book their own appointment

The changes enact new requirements set by Parliament and are designed to increase take-up of the Pension Wise service, which provides free, impartial guidance to consumers about their pension options.

The rules apply to providers of personal and stakeholder pension schemes, including SIPP operators. The regulator has been working with the Department for Work and Pensions on similar regulations for occupational pension schemes.

The FCA is consulting the industry on further ways to encourage consumers to access Pension Wise and other guidance. It is working with the DWP, the Money and Pensions Service (MAPS) and The Pensions Regulator to consider whether more changes are required. 

The Policy Statement applies primarily to pension providers, including operators of self-invested personal pensions. The FCA says it is also relevant to others including individuals and firms providing pensions advice and information, distributors of financial products, especially retirement income products, trade bodies representing financial services firms, consumer bodies, charities and other organisations with an interest in retirement and/or financial services plus individual consumers.

• PS21/21