The UK’s financial regulator, the Financial Conduct Authority (FCA), has told pension providers that they must encourage savers to use the government’s pension guidance service before they access their retirement funds. From 1 June 2022, providers will be legally required to offer an appointment with Pension Wise before customers make their first withdrawal.
How will the changes affect your pension?
If you have already accessed your pension pot, the changes will not affect how you manage or access your funds. However, if you have yet to dip into your funds for the first time, from 1 June 2022 pension providers will have to offer to book an appointment for you with Pension Wise to give you guidance on your pension options once you request to make an initial withdrawal.
The new rules will apply to personal and stakeholder pension providers, including operators of self-invested personal pensions (SIPPs).
At the moment, pension providers are only required to offer a Pension Wise appointment to those looking to access the cash held in a defined contribution plan, but the government intends to boost take-up of its guidance service to ensure that savers are aware of, and make use of, the free advice that they can access before they tap into their cash.
The upcoming changes should make it easier for retirees to book a Pension Wise appointment as providers will have to explain their eligibility, and the purpose of the scheme, before they access their funds for the first time.
We explain more about what Pension Wise is and how it operates below.
What is Pension Wise?
Pension Wise is a free service provided by the UK government to give impartial guidance on defined contribution pension schemes. It is designed for individuals aged 50 years and over, who have either a workplace or personal pension plan, and who are looking for advice on how to manage their retirement funds.
During a Pension Wise appointment, a specialist pensions advisor will talk you through your options for how to access and manage your pension pot. A typical appointment lasts around 45 to 60 minutes.
Around 132,000 face-to-face and telephone appointments were booked with Pension Wise between 2019-2020, up 29% on the year prior, and the scheme has continued to grow in popularity. However, there have been calls for the government to boost adoption of Pension Wise services, including ensuring that eligible retirees are automatically booked into an appointment rather than having to ask to have one arranged for them.
Since Pension Wise was launched in 2015, over 1.6 million people have accessed more than 3 million defined contribution pension pots, with a combined value of over £45 billion. Despite this, data from the FCA shows that 50% of all pension pots on the contract-based retirement income market were accessed without advice or guidance in 2019-2020.
How to book a Pension Wise appointment
If you wish to access Pension Wise advice before you request access to your retirement funds, you do not have to wait for your pension provider to offer you an appointment first. You can book an appointment by yourself by calling on 0800 138 3944 or filling out an online booking form.
More advice on pensions
For further advice on how to access and manage your pension, check out the following articles: