Updated: Pension Wise customers show sound knowledge of freedoms
The vast majority of pension scheme members who use Pension Wise have demonstrated clear knowledge about pension freedoms when questioned on specific facts.
Analysis published the Department for Work and Pensions (DWP) has revealed that Pension Wise customers, either appointment customers or website users, were also more likely to answer questions about freedoms correctly than non-users.
Users and non-users were given eight true or false statements that they had to decide whether were definitely or probably correct, definitely or probably incorrect, or select whether they did not know.
Customers recognised that they did not have to start taking money from your pension as soon as they retired. Some 76% of appointment customers and 82% of website users answered correctly.
Another statement users were correct in answering was that you cannot move a pension pot from one provider to another. A huge 81% of appointment customers and 93% of website users believed this was definitely or probably not true.
Non-users were also mostly correct in answering this statement, with 71% believing it to be definitely or probably not true.
Correctly, 65% of appointment customers and 62% of website users also believed it was definitely incorrect that you must take a 25% tax-free lump sum when you access your pension pot. Less than half (45%) of non-users believed this statement was definitely incorrect.
A further statement customers answered correctly was that you cannot take all the money from your pension in one go. 61% of appointment customers and 65% of website users identified this as definitely wrong, while just 25% of non-users noted it was definitely incorrect.
The DWP revealed 97% of customers felt that their understanding of their options has improved and the proportion who say they have recommended Pension Wise has risen by seven percentage points since 2016/17.
Pension Wise users did also choose correctly for four further statements and most knew that you can normally start taking money from your pensions when you turn 55, and that they did not have to buy an annuity with your pension money.
They also knew you can leave money in your pension pot, and arrange to take it as and when you need it, and that you can mix the ways to take money from your pot.
Note: An earlier version of this article referred to inaccurate data released by the DWP. The article has been updated to reflect the true picture of Pension Wise users' understanding.
More on Defined Contribution
Phoenix launches ESG DC default solution
Phoenix Group will launch an ESG defined contribution (DC) default solution for pension fund clients of its Standard Life Assurance business and their scheme members.
Industry Voice: Beyond the pandemic
Newton’s Curt Custard considers the investment outlook for 2021 and the implications for DC schemes
Master trust investments 'more sophisticated' but 'growing pains' hinder progress
Master trusts’ investment strategies have grown and become more sophisticated over the last three years, but “growing pains” are hindering progress, according to the Defined Contribution Investment Forum (DCIF).
Exclusive: BlackRock's flagship LifePath strategy to target 50%+ ESG by mid-2021
More than half of BlackRock’s flagship UK defined contribution (DC) default fund’s assets will be invested in ESG strategies by June 2021.
