Former Pensions Minister Baroness Altmann has backed the FCA's ‘stronger nudge’ plan for pensions savers to get Pension Wise guidance and has called for the guidance to be compulsory.

She said: “I am delighted to see the FCA consulting on this. I would have preferred an automatic enrolment option, rather than leaving the provider in charge of the messaging for customers, but hopefully the providers will explain clearly to customers why they would benefit from using PensionWise and then they can have a much better chance of making the most of their money.”

She said the FCA was “finally acting” to protect pension customers better and the move would mean it was much more likely that pension savers will get the “independent, unbiased guidance offered by PensionWise.”

While the government-supported Pension Wise guidance is highly rated about 90% of potential users never engage with it meaning usage is “woefully low,” she said.

She said the stronger nudge, currently being consulted on by the FCA, would help pension savers make better decisions about their pensions.

She added: “The Pension Freedoms were always intended to go hand in hand with help for customers to understand the risks of taking money from their pensions. PensionWise service has rave reviews but less than one in ten customers use it before withdrawing or moving their pension money 

“Let’s hope providers do ensure their customers take-up PensionWise appointments to help avoid scams or expensive irreversible mistakes and unnecessary tax bills.”

• Details of FCA plans: https://www.fca.org.uk/publications/consultation-papers/cp21-11-stronger-nudge-pensions-guidance