We could be years off of “nudging” pension savers towards making more informed financial decisions at retirement, according to Just Group director Stephen Lowe, as government has failed to legislate for default pension guidance.

Commenting on the Financial Guidance and Claims Bill that passed a further “key” milestone yesterday, Lowe said: It leaves a bitter taste that, just a day after the FCA published research showing large numbers of those planning to access pensions are struggling to understand their choices, the legislation is reaching its final stages in the Commons without strengthening the existing guidance framework.

“Treasury Minister John Glen last night said the Government believed the Bill would ‘lay the foundations for an effective final nudge’. The truth is that we’ve already had four years of laying foundations and it’s time we built the house.”

Lowe further drew parallels with the development of the pension passport and stated that there is a “danger” that testing and pilot schemes eventually become “excuses” to delay taking action.

“While government tries to work out what works best, millions are making key pension decisions they could easily end up regretting,” he said.

On Monday the FCA released figures from the Financial Lives Survey that raised “serious” questions on whether those planning to access their pension pots shortly had a “sufficient” understanding of their retirement options.

Of those who had reported that they had a clear pan to access their pension money, 98% said the understood their options either “very well” or “to some extent”. However, only 54% of those planning to take money in the next two years knew that an annuity would provide them with a guaranteed income for life.

A survey conducted by the FCA quizzed those aged 55-64 about income drawdown, and of the participants 50% answered all questions incorrectly.

According to Lowe, the FCA recognises that more than half of the people in its research are ‘potentially vulnerable’, but yet as a group that “displays a significantly lower understanding” of their options, the inclusion of default guidance in the bill could have had a “big effect” on ensuring they received the support they need.

“We are disappointed that there was no time for MPs to debate this important point but are hoping this key consumer protection will be achieved when regulators set the detailed framework for pensions guidance. We don’t want to be here in another four years wondering why so many people who are ill-equipped to make complex decisions are effectively going it alone," Lowe concluded.

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