Work and Pensions Committee chair Stephen Timms has submitted a formal amendment asking for more to be done to nudge savers to access pensions guidance as they approach retirement.
Last week (28 October), the Department for Work and Pensions (DWP) submitted a policy statement to say it would “nudge” people towards taking pension guidance. However, the DWP ignored calls for people to be automatically enrolled to Pensions Wise guidance before accessing their defined contribution pots.
In response to the statement, Timms submitted an amendment to the Secretary of State asking the government to write to “members or survivors” of pension schemes five years prior to the age of becoming eligible to access their benefits. They should then schedule a date and time for a pensions guidance appointment or have the option to reschedule this appointment.
The amendment said they should write annually until a pensions guidance appointment has been taken or the member’s desire to opt-out has been confirmed.
Timms said: “Pension Wise offers a hugely valuable service for the pension savers who use it: nearly three-quarters of them make a different decision after having its guidance. But unfortunately only a very small proportion of savers speak to Pension Wise.
“That leaves huge numbers of people at risk of making the wrong decision about accessing their pension savings—risking a lower quality of life in retirement and, in the worst-case scenario, losing all of their pension savings to scammers.”
He added: “The approach the government has outlined today is a step forward. Even on its own evidence, though, it seems unlikely to deliver a really major increase in the numbers of people who take guidance from Pension Wise.”
The Pensions Schemes Bill will be heard at a committee meeting on Tuesday (3 November).
The Pension Schemes Bill passed in the House of Commons at its second reading last month without a vote and it now faces the report stage and the third reading before returning to the House of Lords for final consideration.
In September pensions and financial inclusion minister Guy Opperman said he expected the bill to be law by the end of 2020.