The FCA and DWP have both published the final rules for implementing the "stronger nudge" to pensions guidance which will take effect from 1 June 2022.

The stronger nudge rules will require pension scheme providers/trustees to offer to book an appointment with the Pension Wise guidance service for members in certain circumstances (-broadly, where it appears likely that the member will start to receive benefits soon).  Where the stronger nudge requirements apply, the trustees/provider must not generally action a benefit/transfer value request without obtaining confirmation from the member either that guidance has been received or that the member has opted out of receiving guidance.  The FCA rules will apply to providers of personal pension schemes and the regulations produced by the DWP will apply to trustees of occupational schemes.  

FCA rules (personal pension schemes)

The stronger nudge rules are triggered where a member (or other beneficiary if applicable) has decided in principle to draw benefits from the scheme or to take a transfer to another scheme for the purposes of accessing benefits. (The rules allow a firm to assume that a transfer is for this purpose where the member is aged 50 or over, though providers may choose to ask members why they are transferring.)

Where the stronger nudge rules apply, the pension provider must explain the nature and purpose of pensions guidance (including that it is free) and offer to book an appointment for the member.  If the member accepts the offer, the provider must take "reasonable steps" to book an appointment at a suitable time.  The rules say that this may include giving the member adequate opportunity to revert back with suitable dates and times.  However, the guidance says that once an appointment has been booked, members can manage any rescheduling themselves.  If the firm is unable to book the appointment despite taking reasonable steps (or if the member prefers to book the appointment directly) the provider must provide information on how to book an appointment.

Before proceeding with the member's request, the provider must obtain confirmation either that the member has received guidance (or regulated advice) or that the member has opted out.  If the member opts out due to having received guidance previously, there are some circumstances where the provider may be required to explain the benefits of receiving guidance again.

Unlike the regulations governing occupational pension schemes (see below) the FCA allows a member to opt out of guidance via the same communication that the member uses to make contact with the provider.

DWP regulations (occupational schemes)

Although the wording of the regulations is not as clear as it could be, it appears that SSASs will be exempt from the stronger nudge requirements provided all the members of the SSAS are trustees. 

The stronger nudge requirements in relation to occupational pension schemes broadly apply where a member over 50 (or the member's survivor) applies to start receiving money purchase benefits or to transfer such benefits (unless the transfer is not being made for the purpose of receiving benefits, eg because it is being made for consolidation purposes only).  Before actioning the request, the trustees must offer to book a Pension Wise appointment for the member. If the member accepts, the trustees must take reasonable steps to book such an appointment.  If the offer is not accepted, (or the trustees are unable to book a suitable appointment despite having taken reasonable steps to do so) the trustees must provide the member with details of how to book an appointment.  

The trustees can only proceed with the application to take benefits (or a transfer value if applicable) if they receive confirmation that the member has received guidance, or if the member gives them an opt-out notification.

The consultation response includes the following changes and clarifications to the requirements:

• where the member communicates by post or online, the offer to book may be satisfied by providing a phone number for the member to call if the member wishes the scheme to book an appointment on his or her behalf. The trustees must also provide details of how members may book an appointment directly;
• trustees are not expected to coordinate diaries where communication with the member is purely by post or online;
• trustees will be able to comply with the stronger nudge requirements at the point when they receive communication about a relevant application (eg where the member gets in touch to discuss options for receiving benefits but has not yet made an application).  If the trustees deliver the stronger nudge at this point, they are not required to do so again on receiving the application;
• trustees of a transferring scheme are not required to deliver the "stronger nudge" if the receiving scheme has already done so;
• the opt-out notification must be given in a communication only for that purpose, but the requirement for the opt-out notice to be given in a standalone communication does not apply where the stronger nudge requirements have been triggered by a transfer request;
• the requirement for a standalone opt-out form can be satisfied by directing members to a separate online form;
• where communication is by post, an opt-out form may be included alongside an offer to book an appointment;
• confirmation of having received guidance or opting out can be either verbal or written.

This item was amended on 30 March 2022 to reflect that we now consider that SSASs will be exempt from the "stronger nudge" requirements provided all the members are trustees.