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The stronger nudge to pension guidance has had a “disappointingly low” impact since its introduction two years ago, data from the Money and Pensions Service (Maps) analysed by Quilter has found.
The stronger nudge was intended to normalise people taking Pension Wise guidance as part of applying to take or transfer their defined contribution benefits, meaning that when choosing guidance, people must make an active choice not to seek it.
In the first year following the implementation of the stronger nudge, June 2022 to May 2023, a total of 124,316 guidance sessions were attended, representing a 14 per cent increase compared to the 109,054 sessions attended in the year prior to the stronger nudge being introduced.
However, the research found that despite an initial improvement, the impact of the stronger nudge to pensions guidance appears to have already started to “wane”.
In particular, Quilter found that there are still "relatively few people" taking advantage of the support on offer, despite the stronger nudge, and many who initially plan to use the nudge are backing out before their appointment.
Indeed, the research revealed that in the second year, the number of sessions decreased year-on-year to 117,862, 8 per cent higher than the attendance figure before the stronger nudge came into effect.
Despite this, there was a "considerable" uptick in the number of guidance appointments arranged compared to the year before the stronger nudge, rising by 24 per cent in the same period in both 2022/23 and 2023/24.
However, the proportion of no-shows and cancellations of appointments increased from 25 per cent before the strong nudge to 30.5 per cent in 2022/23 and is expected to increase again to around 34 per cent in 2023/24.
Quilter also pointed out that the Financial Conduct Authority’s retirement income market data showed that the total number of pension plans accessed for the first time in 2022/23 was almost 740,000, up from 705,666 in 2021/22.
However, it noted that, while awaiting data for 2023/24 to provide a clearer picture, this increase in the number of people accessing their pension savings year-on-year has not been reflected through an increase in Pension Wise appointments.
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