Emma Byron, Managing Director, Legal & General Retirement Solutions, comments ahead of the change.“We fully support the stronger nudge guidance. Having participated in the behavioural trials to explore the best way to persuade people to take guidance from Pension Wise, we found that stronger nudges led to a greater take up of appointments. We also saw that where people took no formal advice or guidance, they were almost three times as likely to make a cash withdrawal than put their money in an annuity or drawdown product that could benefit their finances longer term. Taking cash isn’t always the wrong decision, especially for people with smaller pension pots, but what we did see was a stark difference in the actions of people that took advice or guidance and those that didn’t. Taking financial action without giving it proper thought can have a real impact on your lifestyle long-term and as we’ve seen from recent cost of living pressures, having an adequate safety net is essential.
“We currently encourage customers to engage with their retirement planning through a number of prompts and initiatives, from signposting Pension Wise and full advice to our free ‘Midlife MOT’ course with the Open University and our use of Annuity Ready to facilitate shopping around.
“While we are confident this help will have a significant impact on the financial wellbeing of many people, it will be important that we keep a close eye on how it changes their behaviour so we can learn further lessons. It will be prudent to next consider how we support those people who are still accumulating using personalised guidance, to help them to take the necessary action to ensure their retirement aspirations will be met. If savers are not fully aware of the level of pension investment needed, then the Pension Wise appointment may be a rude awakening that leaves them little time to act upon.”
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