Fifth report - Protecting pension savers—five years on from the Pension Freedoms: Accessing pension savings

The government acknowledges the need for more support for savers and lists ongoing measures like Pension Wise, Pensions Dashboards, Mid-life MOT, and Stronger Nudge, without committing to any new specific action.

The government does not believe it is appropriate to make changes to tax policy related to the Pension Commencement Lump Sum (PCLS) due to concerns about members accessing their lump sum earlier without advice and potential negative impacts on retirement outcomes, but will issue a call for evidence in May 2022.

The government is deferring the response to MaPS and the FCA.

The government response focuses on Collective Defined Contribution (CDC) schemes and doesn't address the recommendation to research decoupling the tax-free portion of pension pots. It is therefore not addressed.

The government's response discusses the code of practice for CDC pension schemes instead of addressing the observation about the decline in annuity use. Therefore it is not addressed.

The government states that the FCA will be responding to the recommendation separately.

The government acknowledges the importance of joint consultations between TPR and FCA and supports this goal where opportunities permit, citing examples of collaborative work. DWP intends to issue a call for evidence in May to consider what members of trust-based schemes want in terms of information and support.

The DWP intends to issue a call for evidence in May 2022 to inform whether policy interventions are necessary to support savers in occupational pension schemes, before considering introducing default retirement pathways.

The FCA will be responding to this recommendation separately.

The government does not support setting a goal for the combined use of Pension Wise and paid-for advice when accessing pots for the first time. It encourages MaPS to evolve the Pension Wise service.

The government disagrees with the proposal to automatically book Pension Wise appointments, citing issues with the approach, and says it is considering further encouraging early engagement with pensions guidance.

The government will consider the recommendation in more detail, noting a Pensions Policy Institute DC data project and ongoing consultation on Pensions Dashboards Regulations, but does not commit to any specific action at this time.

The government states that HM Treasury works closely with the FCA to ensure that the financial advice market works well, competitively and fairly for both firms and consumers, and that the advice being provided is of high quality, including for pensions advice.

The government states that amending the level of PAA would depend on changes being made. The government continues to monitor the uptake of the PAA to understand the success of the scheme and is keeping the level under review.

The government states that the FCA will be responding to this recommendation separately.

The government supports MaPS’ guidance transformation strategy, which will seek to triage members towards the guidance service most appropriate for them and increase the flexibility of Pension Wise so that it may more be more effectively tailored towards an individual’s needs.

The government did not commit to trialling automatic Pension Wise appointments, but mentioned that TPR and the FCA promote the tools available from MoneyHelper and will continue to work with partners to promote guidance services.

The Government agrees that digital tools have an important role and encourages MaPS to go further in developing its digital offer, supporting MaPS' guidance transformation strategy, but notes some people may need additional support.

The government defers action on reporting annually on progress to increase the uptake of pensions advice, stating that transactions should not be enabled on dashboards initially and future enhancements to dashboards functionality should be decided after the initial offer has been tested with users.

The government acknowledges the issue of deferred small pots and describes existing actions like Pensions Dashboards, Simpler Annual Benefit Statements and a de minimis on flat fee charges. They are working with an industry group to develop automated consolidation solutions but do not directly address the specific recommendations regarding the PAA.

The government states that individuals using dashboards will be able to delegate access to MaPS guiders or authorized financial advisers and that the MaPS dashboard will be integrated into the MaPS retirement planning hub to better tailor guidance interventions.

The government welcomes the industry-led campaign for Pensions Engagement Season and states they will continue to look at ways that they can prompt people to engage with their pensions, including what role annual benefit statements can play.

The government is working with the Money and Pensions Service to test and develop a financial Mid-life MOT, building on previous tests and examples, and will trial Midlife MOT activity in Jobcentres and the private sector to help older workers plan their career and remain in work.

The government acknowledges the benefits of consultation and announces that the NMPA will rise to 57 in April 2028. This does not address the need for digital tools in guidance, so is classified as not addressed.

The government agrees that pensions dashboards offer a significant opportunity and are working closely with regulators, pension providers, and administrators on this issue.

The government states that individuals using dashboards can delegate access to MaPS guiders or authorised financial advisers, and the MaPS dashboard will be integrated into the MaPS retirement planning hub.

The department is working closely with the ABI/PLSA-led industry coordination group on consolidating small pension pots and expects a progress report in May 2022.

The Money and Pensions Service (MaPS) dashboard will be integrated into the MaPS retirement planning hub to tailor guidance interventions according to individual needs and will help savers to see in one place what they have and help facilitate a Pension Wise appointment.

The government has recently introduced Regulations to make Annual Benefit Statements for defined contribution schemes simpler and easier to understand.

The government acknowledges the challenges of delivering a statement season and states they will continue to look at ways to prompt people to engage with their pensions, but offers no specific action beyond welcoming the industry-led Pensions Engagement Season.

The department claims to be already working closely with the Money and Pensions Service, supported by the wider Mid-life MOT Board, to test both the most effective format(s) for Mid-life MOTs and the most efficient delivery route for Mid-life MOTs, building on the findings of the 2021 Local Enterprise Partnership Digital Delivery tests.

The government acknowledges the benefits of timely and thorough consultation and achieving cross-party consensus where possible. They cite consultations regarding the NMPA increase as evidence of this approach, while protecting existing rights.

The government asserts they are already committed to providing savers with information and support. They cite the call for evidence, Pension Wise, pensions dashboards, Simpler Annual Benefit Statement, Mid-life MOT initiative and Stronger Nudge policy as existing measures and will continue to review ways to improve support offered to individuals.