Question to the Department for Work and Pensions:

To ask the Secretary of State for Work and Pensions, if she will review the mandatory financial advice requirement for people wishing to transfer or convert a DB pension with a transfer value worth more than £30,000 through the pension freedoms regulations 2015.

The Secretary of State has a duty to review this requirement to take financial advice. The first report must be published before 6 April 2023, as set by the Pension Schemes Act 2015 (Transitional Provisions and Appropriate Independent Advice) (Amendment) Regulations 2017. At this time, the Government has no immediate plans to review or lower the threshold at which individuals are required to take financial advice.

In 2015 Parliament passed the requirement to take financial advice for anyone seeking to transfer or convert a cash equivalent value of £30,000 or more from a defined benefit pension to an arrangement where they could flexibly access those savings. This statutory legal requirement was introduced to ensure individuals with valuable pension benefits are fully aware of the risks involved in giving up a secure income in retirement to one that may be susceptible to fluctuations in the financial markets, and carefully consider the implications of permanently surrendering their guarantees before they decide to transfer or convert those benefits.

Government’s commitment to maintain the existing threshold forms part of a wider commitment to safeguarding consumer savings – we want individuals to better understand their choices and the risks that exist. To this end, DWP will be introducing new information requirements from the age fifty to those with defined contribution pension savings, that will inform them in more simplified terms, about their retirement options and the availability of guidance to help with their decisions. DWP also see accessing guidance as a natural part of the journey savers take, before making a decision relating to the pension freedoms. Following the recent trials, which showed a nudge to guidance during the application process is effective, we will be commencing section 19 of the Financial Guidance and Claims Act 2018, which amends the Pension Schemes Act 1993.