Just Group calls for 'radical' auto-enrolment into pension guidance

Submitting recommendations to the Work and Pensions Committee's pensions freedom inquiry, Just says a "more active approach to promoting independent and impartial pension guidance will give savers more faith in the pension system and help them to make better informed decisions at retirement".

The Group says people should also be actively encouraged to receive guidance from age 50 - five years ahead of the age when people are eligible to access their pension savings - as "many people making requests to access their pension savings at age 55 have formed decisions they are reluctant to change".

If they do not accept this invite, Just wants to see people who have not received guidance or regulated advice, and who make a request to access their pension savings, automatically enrolled into the free, impartial government guidance service.

Just says this would act as "a backstop, a protection measure for people who have not accepted invites to engage with the service in the 5+ years prior to this point".

Stephen Lowe, group communications director at Just, said that making guidance the default option would be consistent with other areas of pension policy, such as auto-enrolment into workplace pensions that has dramatically increased the numbers saving towards retirement.

He continued: “Our view, and the one we are sharing with the Work and Pensions Committee inquiry into the pensions freedom reforms, is that guidance needs to built-in so that it becomes just another normal step in the process for most people.

“We can’t expect the passive communications of pension providers to drive guidance usage to acceptable levels, instead we need a more radical, transformational change to the government’s policy. We think that is auto-enrolment into guidance.

“Pension Wise is highly recommended by all who use it, but too many are missing out. This greatly increases the risk of customers making uninformed decisions that can lead to years of lost benefits, and maybe even losing life savings to scams or fraud.

“It is already a requirement for mortgage customers to take regulated advice so why are pensions a free-for-all? Research we carried out recently found that more people were confident making mortgage decisions than pension decisions and most thought guidance or advice should be a requirement when taking pension benefits."