Pension Wise guidance and your clients

Learn about the latest changes, and how they will affect your clients.

On 1 June 2022, the government implemented changes for pension providers to ensure they refer customers to Pension Wise, a free, impartial government service.

Greater autonomy surrounding pension planning means that it’s now more important than ever for your clients to have the right information. 

Helping your clients make the right decisions with their pension is crucial.

Now, with pension providers required to guide consumers towards Pension Wise, it’s important to cover the important details.  


What is Pension Wise?  

As a free and impartial government service, Pension Wise aims to help consumers understand what type of pension they have, how to access it and the potential tax implications of their available options. 

In addition, the service offers guidance on shopping around and how consumers can find the best products to suit them.

With pension scams rising, it also handily covers how to spot them and how they can be avoided altogether.  

Independent research has found that 97 per cent of people who have received Pension Wise guidance would recommend it to others.

A meeting with a specialist can take place either in person or over the phone. It usually takes between 45 and 60 minutes and will see the following points explained to consumers: 

  • Factors that may impact their decision-making, including plans to continue working, personal and financial circumstances and leaving money as part of a will 

  • The payment options available and how they relate to individual circumstances 

  • The tax implications of accessing a pension 

  • Things to check before making any decisions 

  • How to look out for scams 

  • Next steps 


Who can access the Pension Wise service? 

Consumers who are aged 50 or over and have a defined contribution pension pot (either personal or workplace) are eligible for a free Pension Wise appointment.  

Booking a Pension Wise appointment can be done either over the phone, by calling 0800 100 166 for free or online via Money Helper.  

Before an appointment, it’s helpful for consumers to prepare. You can advise your clients to gather information on the following before their Pension Wise meeting: 

  • If they have a defined contribution pension 

  • The value of their pension pot(s) 

  • Whether their pot contains any guarantees or special features 

If your client has more than one pension pot, they will need to gather information on all of their pots together. And if for any reason they have lost track of any pensions, a free government-backed Pensions Tracing Service is available,  

If your client has lost track of any pensions, they can use the Pension Tracing Service, which is a free government-backed service that can be found on the GOV.UK website. They can also use the government’s free pension forecaster, which offers an estimate of how much state pension they will receive.  


What has the government changed?  

In 2015, the government introduced greater choice in how consumers could access their pension savings income, and committed to helping them understand their options.

From 1 June 2022, pension providers are now required to give a Pension Wise nudge to consumers across the UK when they’re deciding on accessing their pension savings.

The providers will be required to refer customers to Pension Wise guidance, explaining its nature and purpose.

Providers must also offer to book a Pension Wise appointment for customers. If the offer is accepted, they must book the appointment or provide the customer with sufficient information for them to book their own appointment.  

The changes ultimately aim to increase take-up of the Pension Wise service.

Offering free and impartial guidance to consumers about their options for accessing defined contribution (DC) pension savings, Pension Wise can reduce their risk of spending a pension pot too soon.  

The changes that have been introduced will primarily affect pension providers, including operators of self-invested personal pensions.

In addition, it will also be relevant to those stakeholders with an interest in the pensions and retirement income sector, including: 

  • Individuals and firms providing advice and information in this area  

  • Distributors of financial products, especially retirement income products  

  • Trade bodies representing financial services firms  

  • Consumer representative bodies  

  • Charities and other organisations with an interest in retirement and/or financial services  

  • Individual consumers 


Why is it important to utilise Pension Wise?   

Expert guidance can change the way people spend their pensions, and Pension Wise aims to prevent consumers from running out of pension savings.

A recent Pension Wise survey found that those who haven’t taken free pension guidance are more likely to have accessed their pension pots, less likely to have invested, less likely to have settled debts, and far more inclined to spend their pensions on non-essential items.  

Early fears about the 2015 changes to pension choices were prevalent, with many predicting that savers would withdraw all their pots unnecessarily and use their savings on luxuries.

And while these fears were initially unfounded, Pension Wise’s recent survey suggests that savers are in fact likely to be less efficient with their pension pots; one of the starkest results found that 36 per cent of those who did not consult Pension Wise had spent pension savings on non-essential items, like holidays or a new car, while only 14 per cent of those who had received the free guidance did so.  

Pension Wise encourages consumers to be more cautious and less extravagant in all areas, ensuring that they don’t run out of savings.  

Keeping your clients informed on pensions is crucial, allowing them to prepare for their financial future with confidence.

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About the author
Kate Morgan
Kate Morgan
Kate has written for leading publications and blue chip companies over the last 20 years.

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