The DWP is consulting on measures to increase the take up of Pension Wise (“Guidance”) by imposing new requirements on schemes which offer flexible benefits (broadly money purchase or cash balance rights) to obtain Guidance unless they formally opt out.
The new requirements will apply to members aged 50 or over who make an application to transfer or to start receiving flexible benefits, regardless of the size of their pot. The DWP proposes not to define at what point the stronger nudge must occur, but the policy intention is that it should be as early as practical within the process. Members seeking to transfer would, where relevant, also need to attend a new scams guidance appointment once this is brought into force. Where the “stronger nudge” applies, existing signposting requirements fall away.
The nudge will not be required for transfers to defined benefit schemes or where the sole purpose is consolidation. Moreover, members can opt out of the requirement to obtain Guidance, but this process has to be undertaken separately from the initial transfer application. The intention is that this will force members to think carefully before opting out.
Members applying for a serious ill-health lump sum or where the member has received Guidance in the previous 12 months or regulated advice on the transaction can opt-out of the Guidance requirement without this having to be undertaken as a separate process.
Schemes must:
The consultation closes on 3 September 2021.