Insights and Analysis

Stronger nudge to pension guidance: action needed by trustees

01 March 2022

1 June 2022 will see new requirements for trustees to give members a “stronger nudge” to take appropriate pension guidance (“pension guidance”) before starting to draw flexible benefits or (in certain cases) transferring their flexible benefits. “Flexible benefits” are broadly, money purchase or cash balance benefits.

Where the requirements apply, trustees must offer to book a pension guidance appointment for the member. The trustees must not proceed with the member’s application to transfer or draw benefits until the member either:
- confirms that they have received pension guidance; or
- opts out of taking pension guidance by giving an “opt-out notification”.
Defined benefit (DB) schemes will be caught by the stronger nudge requirement in relation to any defined contribution (DC) additional voluntary contributions (AVCs).
The stronger nudge requirements are in addition to (and separate from) the scam protection checks which trustees must carry out from 30 November 2021 before processing a member’s statutory transfer application. For more details of the scams protection requirements, please see our note.

Unfortunately, the drafting of the legislation makes what is a well-intentioned requirement to protect members likely to be unnecessarily complicated in practice. This note explains the new requirements and sets out practical steps trustees (and their administrators) should be taking to ensure compliance.