Earlier delivery of “stronger nudge” will boost retirement decision-making
Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, comments on earlier delivery of pension “stronger nudge” will boost retirement decision-making from today.
Key points:
- From today pension providers and trustees will be required to offer an appointment with Pension Wise for customers accessing their funds for the first time.
- Pension Wise offers free 45-minute guidance sessions on retirement options.
- The FCA says the nudge can be delivered when the customer applies to take a retirement income. However, it is likely to be more effective if delivered earlier.
- Increased use of Pension Wise is positive but does not guarantee good customer outcomes as people still need to make final decisions on providers and products.
- Enabling providers to offer a more personalised guidance service could help people make better decisions.
Helen Morrissey says:
“Getting help and guidance on your retirement options is really important and so any measures helping people access this are welcome.
“Over time the “stronger nudge” could really boost awareness of retirement options and the need to plan, and will increase awareness of Pension Wise too.
“However, how and when this nudge is delivered is all important in helping people get good outcomes. The FCA has opted to go with delivering the nudge when the customer applies to take a retirement income.
“The rules don’t preclude delivering the nudge earlier but by setting the minimum at point of access there’s a chance that this is what many providers will opt for.
“When Hargreaves Lansdown participated in the behavioural trials with the Money and Pension Service it was found the earlier the nudge came in the process, the more likely the person was to take up the appointment.
“Waiting until a point where someone may already have decided how they want to take their retirement income was never going to be as successful as contacting someone who is still exploring their options.
“The nudge to guidance is also only one step in the journey towards good member outcomes. High numbers of people receiving guidance is positive, but the customer still needs to make decisions around products and providers, and many may continue to struggle.
“The ability to provide these people with a more personalised guidance service could really help them make more confident and informed decisions around their retirement.”
Kindly shared by Hargreaves Lansdown
Main article photo courtesy of Pixabay
