It's little over seven years since the then-Chancellor set out radical reforms to the pension system to give savers more choice and flexibility in how to take their retirement benefits. While these "pension freedoms" have been widely welcomed, the unintended consequences have stacked up: from tax traps and pension scams to poor deals for members and DB transfer mis-selling. 

The importance of guidance to help savers navigate the myriad options at their disposal has therefore never been greater. Which is why the FCA has proposed requiring pension providers to offer (and subsequently book, if the member wishes) an appointment with Pension Wise - the free and impartial government service. 

Under the proposals, the new process will work as follows. Once an individual has decided, in principle, how to access their pension savings, the pension provider must:

  1.  Refer the individual to Pension Wise guidance
  2.  Explain the nature and purpose of Pension Wise guidance
  3.  Offer to book a session. If the individual accepts the offer, the Provider must then either book the appointment or give the individual sufficient information to book their own session.

The changes signal a major departure from the current process, under which providers must merely signpost savers to Pension Wise guidance and encourage them to seek guidance or advice on their at-retirement options. This lighter-touch approach has had limited success, with low take-up levels for Pension Wise guidance to date. The FCA is required to make rules for personal pension providers to ‘nudge’ savers to Pension Wise under the Financial Services and Guidance Act 2018, and the new rules are expected to ensure that "nudge" is, ultimately, a much firmer one.