Stronger Nudge rules come into force

Stronger Nudge rules and regulations came into force on 1 June 2022 to encourage individuals to access guidance when accessing their defined contribution (DC) pension savings¹. The measure sits within the wider pensions and regulation and policy landscape, alongside Pensions Dashboards and Simpler Annual Pension Benefit Statements, which the government says will give individuals access to information and guidance on their retirement planning¹.

The government set out how it monitors the policy in its response to the Work and Pensions Committee, received on 11 January 2023 and published on 23 January 2023¹. It said it uses the volume of appointments attended each quarter through MoneyHelper and compares this with periods before the Stronger Nudge¹. In July to September 2022 there was a 20% year-on-year increase in the number of Pension Wise appointments attended, which the government said "will include some impact of the Stronger Nudge"¹. It also monitors Financial Conduct Authority Retirement Income data, which shows the proportion of DC pots accessed in the contract-based market with financial advice or Pension Wise guidance¹.

The government rejected the Committee's recommendation to trial a system of automatic Pension Wise appointments, saying it does not support such a trial but will consider all options for signposting and nudging individuals to appropriate guidance¹. It pointed instead to broader guidance such as the mid-life MOT, saying Pension Wise is appropriate for those considering how to access their savings but "is not broad enough for most other circumstances"¹. The Committee had recommended that by March 2023 the Department for Work and Pensions, the FCA and the Money and Pensions Service publish metrics for evaluating the Stronger Nudge, covering take-up, timing and behaviour change, with the evaluation completed by the end of July 2023¹.

Why it matters for households

The rules apply to people with DC pension savings who are deciding whether and how to access them, and they took effect from 1 June 2022¹. In practice, the Stronger Nudge targets members at the point of deciding whether and how to access their savings¹. The government's own monitoring shows a 20% year-on-year rise in Pension Wise appointments attended in July to September 2022, a figure it says includes some impact of the Stronger Nudge¹. Free guidance on pension options is available through Pension Wise, and the wider pensions hub covers topics including when you can access a private or workplace pension and how pensions affect Pension Credit and other benefits. The government has said the decision whether to receive guidance remains a personal one based on individual circumstances¹.

What happens next

The Committee recommended that evaluation metrics be published by March 2023 and that the evaluation be completed no later than the end of July 2023¹. The government said it is committed to continually monitor the use of Pension Wise, including the impact of the Stronger Nudge, and will continue to work with the Money and Pensions Service on feedback about users' experience of the service¹. It also said it had published a call for evidence in June to consider the help and support members of trust-based pension schemes should receive when accessing their pension savings, and is considering next steps¹.