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Pensions Guidance and Advice
01 March 2022
Lead MP
Nigel Mills
Amber Valley
Con
Responding Minister
Guy Opperman
Tags
Crime & Law EnforcementEconomy
Word Count: 14681
Other Contributors: 9
At a Glance
Nigel Mills raised concerns about pensions guidance and advice in Westminster Hall. A government minister responded.
Key Requests to Government:
The Government should set a clear target for pension advice and guidance take-up, such as aiming for at least 60%, and support trials to improve uptake through measures like automatic appointments and more flexible information provision by pension schemes. The Minister is encouraged to recognize the urgency of addressing this issue.
How the Debate Unfolded
MPs spoke in turn to share their views and ask questions. Here's what each person said:
Lead Contributor
The pension system is complex and many individuals do not understand their options before making difficult decisions at retirement. Statistics show that fewer people are taking advice, particularly concerning defined contribution pensions and the potential missteps during retirement savings withdrawals leading to significant financial detriment. The take-up of Pension Wise guidance has fallen short of expectations, with less than 20% engagement among eligible individuals despite positive user feedback on its effectiveness.
Alan Brown
SNP
Glasgow Cathcart
Agreed with concerns about complacency in the Minister's response regarding stronger nudging measures to address pension issues. Mr. Brown expressed concern about the complexity of pensions and the need for impartial advice to prevent people from making poor decisions or being scammed. He cited statistics showing that £42 billion has been flexibly withdrawn since 2015, but only 14% of defined-contribution pension pots are accessed after using Pension Wise, suggesting a high risk of improper use. Additionally, he highlighted the issue of unregulated advisers undercutting regulated financial advice services. Will the Minister give way?
Chris Stephens
SNP
Glasgow South West
Questions the effectiveness of Pension Wise service noting a decline in appointments, advocating for auto-appointments. Mr Stephens, a member of the Select Committee, proposed an evaluation trial of auto-appointments to increase take-up of pension guidance based on evidence from various associations and organisations.
Emma Hardy
Lab
Kingston upon Hull West and Haltemprice
Emphasised the need for clear and impartial guidance given the current levels of pension fraud, stressing that individuals are being defrauded from their pensions and receiving poor advice. She highlighted the urgency for concrete actions from the Financial Conduct Authority to improve pension advice take-up. She discussed challenges like people opting out of pensions due to cost-of-living pressures, complexity in managing multiple pension pots, and issues with gig economy workers being excluded from automatic enrolment. Emphasized the urgency of tackling evolving scams beyond just telephone fraud, suggesting that online avenues are becoming more prominent.
Gareth Davies
Con
Grantham and Bourne
Britain leads in pension fund investing with £3 trillion under management. However, 69% of people in the east midlands investing in pensions do not receive advice, indicating a need for better savings culture from early working life onwards. Davies suggests expanding auto-enrolment to those aged 18-22 and using technology to improve pension visibility.
Jim Shannon
DUP
Strangford
Mr Shannon highlighted the importance of pension awareness, noting that some staff members have no knowledge of their pension options despite having a pension. He mentioned Pension Wise's low usage and recommended improvements to energise its engagement. He emphasised the need for better communication about pensions in schools and throughout working life. Warned that pension schemes promising too good an offer are likely to be fraudulent, emphasizing the need for caution.
Matt Rodda
Lab
Reading Central
I am grateful for the hon. Gentleman's comments about the importance of pension savings and questioned whether there is a contradiction between employment growth and workforce size reductions as mentioned. He supported the points made about families struggling due to rising heating and fuel bills, linking it to the wider cost of living crisis.
Peter Bone
Con
Wellingborough
Expressed concern over the current low take-up rates for pension advice and guidance and supported the idea of conducting trials to increase engagement among hard-to-reach groups.
Rosie Cooper
Lab
West Lancashire
Highlighted that many people are tricked into making poor financial decisions due to a lack of understanding, and suggested that more guidance is needed to prevent such situations.
Stephen Timms
Lab
East Ham
Stephen Timms highlighted the failure to implement George Osborne's promise of free, impartial guidance for pensioners. He cited statistics showing low take-up rates and emphasized the importance of Pension Wise in preventing scams. Timms urged the government to make Pension Wise appointments a default option.
Government Response
Guy Opperman
Government Response
Firstly, the Minister acknowledged and agreed with many points raised in the debate about pension guidance and advice. He addressed specific concerns such as the number of pension pots, which he estimated would likely be 10 to 11 rather than four to five. The Minister highlighted the Pension Tracing Service and the upcoming Pension Dashboard, emphasizing its importance for integrating various pensions schemes data. He also noted that while there were criticisms from businesses regarding data handling, his approach involves pressing the industry to improve their data robustness. The FCA's stronger nudge policy was set to come into effect on 1 June, addressing automatic enrolment opt-outs and signposting Pension Wise by pension schemes. The Minister explained that this required schemes to actively offer guidance rather than merely signpost it. He also discussed the importance of the Money and Pensions Service (MAPS) and its younger institution, MoneyHelper, noting their significant contributions with 220,000 people supported in 2020-21. The Minister outlined plans for tackling pension scams through legislative measures like the Pension Schemes Act 2021 and advocated for companies to self-regulate against fraudulent activities without needing government intervention.
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About Westminster Hall Debates
Westminster Hall debates are a chance for MPs to raise important issues affecting their constituents and get a response from a government minister. Unlike Prime Minister's Questions, these debates are more in-depth and collaborative. The MP who secured the debate speaks first, other MPs can contribute, and a minister responds with the government's position.