Pension providers will be required to ask members if they have had guidance before transferring or accessing their pension under an amendment to the Financial Guidance and Claims Bill.
The amendment was passed last night in the House of Lords and had the support of Lord Sharkey and Baronness Ros Altmann, among others.
Sharkey said the amendment is designed to be a “nudge” rather than a compulsion.
He said: “The amendment would require the FCA to change its rules to make possible the provision of last-minute information and guidance to those who have not already had it and who are about to access or transfer their pension assets.”
Sharkey added: “The FCA would be required to write into its rule book a requirement for trustees or pension managers to ask members, or their survivors, at the point at which they require access to or transfer of their pension assets, if they have received the information and guidance mentioned in Section 3 of this Act.
“If they say no, the FCA may require the trustee or manager to provide access to such information and guidance before proceeding.”
Sharkey highlighted the low levels of take-up of guidance from Pension Wise, which will be rolled into the single body alongside the Money Advice Service and The Pensions Advisory Service.
He adds: “Adopting the amendment would mean that people accessing their pension funds could be given a final nudge. There is no compulsion; simply the provision of a last-minute opportunity to see for the first time—for those who have not seen it already—the excellent information and advice available to them, if the FCA judges them to belong to a category that is particularly at risk.”
Former pensions minister Altmann said: “This amendment would allow the use of similar principles to auto-enrolment and would help to overcome the inertia and lack of engagement with the complexity of pensions. By arranging or directing customers to free guidance rather than just mentioning it to them, take-up is likely to be much higher.”