Behavioural trials to explore more effective ways of prompting people who phone their pension provider for retirement information to take Pension Wise guidance could increase the take up of appointments by three times when compared with the current signposting to this group.
The research, conducted by the Behavioural Insights Team on behalf of the Money and Pensions Service (MaPS), tested two potential routes when customers asked about access to their workplace savings, either offering to make a Pension Wise appointment for them or transferring them to a Pension Wise employee who could explain the offer and make a booking.
Excluding people who said they had already taken guidance or advice in the past 12 months, the trial found around 11% of customers then attended an appointment within the next 6 weeks, compared with less than 3% of savers in the control group.
The research was done with the support of three providers – Aviva, Hargreaves Lansdown and Legal & General Investment Management.
Qualitative research conducted as part of the trial found people were more likely to take up the guidance on offer when they were still exploring their choices rather than when they were requesting a specific option for accessing their money.
The Pension Wise service offers free and impartial guidance to anyone over the age of 50 who wants to explore the options available for them at retirement, and customers access the service at a range of times in their lives.
During the passage of the Financial Guidance and Claims Act 2018 Parliament acknowledged that there was a need to encourage people to seek guidance in a way that engages them and ministers committed to testing different approaches. These results will help inform the Department for Work and Pensions and the Financial Conduct Authority when it comes to future regulations and rules.
Minister for Pensions and Financial Inclusion, Guy Opperman said:
“We are committed to ensuring that people preparing for retirement have access to the necessary support and information to make informed choices about their financial futures.
“The encouraging results from these trials will help inform our work to ensure savers are aware of the free, impartial pensions guidance available from the Money and Pensions Service.”
Carolyn Jones, Head of Pension Policy and Strategy at the Money and Pensions Service, said:
“Increasing take up of the Pension Wise service at this decisive moment in people’s financial lives is clearly a good outcome but it is only a starting point. More work should be done to explore the practicalities of making these trial approaches the standard – and then we need to build on them.
“There remains a large proportion of people accessing their retirement savings without taking guidance or advice. We need to develop a greater understanding of who these people are, and whether they face significant detriment as a result, if we are to identify the best way to support everyone’s financial wellbeing as they head into later life.”
Pantelis Solomon, Head of Financial Behaviour at the Behavioural Insights Team, said:
“The Stronger Nudge intervention improved the uptake of guidance by offering it as a normal part of the pension access journey, making it easy for pension holders to book a Pension Wise appointment. The results build on the successful implementation of the Pension Passport which also sought to apply behavioural insights to increase the uptake of guidance.
“These findings provide further evidence that simple, low-cost policies which go with the grain of human behaviour can help to improve people’s decision making.
“We hope that more interventions which apply behavioural insights will be tested to increase the take-up of guidance even further and ensure that people are getting the help they need at retirement.”
Lindsey Rix, CEO UK Savings and Retirement at Aviva, said:
“Aviva is a huge believer in the importance of financial help. We provide our own help to millions of customers, and we are big supporters of the work of the Money and Pensions Service, including Pension Wise.
“This trial has been a positive example of the private and public sector working together, for the common good. Aviva looks forward to supporting similar initiatives in the future.”
Nathan Long, Interim Head of Policy at Hargreaves Lansdown, said:
“The research shows quite clearly that nudging people to get guidance at the earliest opportunity drives far higher numbers of people to speak to Pension Wise. The beauty of this finding is the FCA has already acted to ensure providers send pension savers more reminders and from a younger age, suggesting guidance could easily become the norm for soon-to-be retirees.”
The full report is available here.
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Notes to editors:
Pensions passports consolidate the usual wake-up pack sent to pension savers into a single side of A4, compared with the usual 50–100 pages.
What is the role of Pension Wise as people approach retirement?
Pension Wise was established in 2015 to support consumers with free and impartial information about the options introduced by the Pension Freedom and Choice reforms. It was set up by the government and is now one of the services run by the Money and Pensions Service (MaPS), an arm’s-length body of the Department for Work and Pensions.
Pension Wise offers specialised pension guidance to people over the age of 50 who have a personal or workplace pension and who want to consider the options available to them for when they retire.
About the Money and Pensions Service
The Money and Pensions Service vision is everyone making the most of their money and pensions.
The new organisation brings together the free services delivered by the Money Advice Service, The Pensions Advisory Service and Pension Wise.
The arm’s-length organisation is sponsored by the Department for Work and Pensions, with a joint commitment to ensuring that people have access and guidance to the information they need to make effective financial decisions over their lifetime. The organisation also engages with HM Treasury, which is responsible for policy on financial capability and debt advice.
Working hand-in-hand with stakeholders throughout the UK, the Money and Pensions Service ensures that money and pensions guidance is available to those that need it, adapting to people’s changing needs throughout their lives, offering services and appointments over the telephone, online and in person where appropriate.
For further information stakeholders should visit the Money and Pensions Service website www.moneyandpensionsservice.org.uk
Consumers can continue to access free guidance about their money and pensions via the following websites and help lines: