Government rejects automatic enrolment into guidance appointments and tax-free cash ‘decoupling’

Tom Selby
27 April 2022

•    The Government has rejected calls to automatically enrol pension savers into a guidance appointment with Pension Wise before accessing their retirement pot (Protecting pension savers—five years on from the Pension Freedoms: Accessing pension savings: Government response to the Committee’s Fifth Report (
•    Policymakers say concerns over costs plus the risk would be pushed towards guidance that was inappropriate for them drove the decision
•    Government also pours cold water on proposals to ‘decouple’ the decision to take your 25% tax-free cash from choosing a retirement income route

Tom Selby, head of retirement policy at AJ Bell, comments:

“Ensuring people have access to support, guidance and, ideally, regulated advice throughout their retirement saving is critically important. 

“However, the idea that people should be automatically enrolled into Pension Wise guidance appointments came with huge risks - not least that it would cause costs to balloon and potentially create a spate of delays, cancellations and complaints if it wasn’t something the customer wanted. 

“It’s also important to acknowledge that official guidance, while extremely valuable, is just one source of information for people saving, approaching retirement or taking an income. 

“Rather than myopically focusing on official guidance, it makes sense to look more broadly not only at the different organisations that can help people make informed decision, but also when that guidance is provided.

“As part of this – and to support the introduction of the FCA’s Consumer Duty – policymakers need to provide greater certainty for firms over the advice/guidance boundary.

“Most providers working with non-advised customers want to provide extra help and support to savers but are restricted by fears of straying over the line into providing advice. If the FCA and Government could deliver more clarity in this area then outcomes for savers could undoubtedly be improved.”

Tax-free cash decoupling

“The idea that the decision to take your pensions tax-free cash should be ‘decoupled’ from choosing a retirement income route felt like a solution to a non-existent problem. 

“The reality is that most people enter drawdown when they take their tax-free cash, meaning their options remain open. 

“In fact, in many cases – particularly where the individual is not taking a retirement income – there might be no change to their investments at all.

“Given this fact, combined with concerns people might be encouraged to access their tax-free cash earlier, it is no surprise the Government has chosen not to pursue reform.”

Tom Selby
Head of Retirement Policy

Tom Selby is a multi-award-winning former financial journalist, specialising in pensions and retirement issues. He spent almost six years at a leading adviser trade magazine, initially as Pensions Reporter before becoming Head of News in 2014. Tom joined AJ Bell as Senior Analyst in April 2016. He has a degree in Economics from Newcastle University.

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