Cutting red tape and diluting the financial options for retirement down to just one page has paid off for savers unsure what to do about their pension money.
The government’s Behavioural Insights Team – better known as the ‘nudge unit’ – designed a pension passport for three major providers to send to their customers who were approaching retirement.
Instead of the standard 50 to 100-page retirement pack, the passport consolidated the most important information into a single A4 page.
The passport aims to encourage people near retirement to take financial guidance about how to access and spend their pension wisely.
Pensioners fail to shop around for advice
“We wanted to help more people make an informed decision about what to do with their pension. BIT ran three randomised-control trials to encourage people approaching retirement to seek pension guidance, in collaboration with the UK Government’s Pension Wise service and three pension providers,” said a BIT spokesman.
“We are thrilled with the success of the Pensions Passport, however take up of guidance remains low overall. Going forward, more intensive interventions could be explored to ensure that people are getting the help they need at retirement.”
Official research found that 37% of pensioners did not shop around for pension advice because they could not take on the vast amount of information they needed to make an informed decision, explained the spokesman.
Significant impact on retirement savers
Redesigning the passport triggered ten times more visits than usual to the Pension Wise web site, while a quarter confirmed the passport had spurred them into acting to find out more about their retirement finance options.
“These findings have led one firm to overhaul all wakeup packs to effectively signpost consumers to guidance and advice about their retirement options. We are delighted that they will send a passport to all of their pension customers,” said the spokesman.
“We would encourage other providers to follow the lead and make similar changes to wake up packs. Widespread use of the pension passport could have a significant impact on the numbers of consumers seeking pension guidance and, in turn, contribute to better outcomes for consumers in retirement.”