The FCA’s Retirement Outcomes Review

Which? has welcomed the work the FCA has done for the Retirement Outcomes Review. The pensions and retirement income sector supports 34 million consumers either saving for, or taking a private or workplace pension in the UK. Decisions on pensions can have a significant impact on the financial well-being of consumers, it is therefore vital that there is a robust regulatory environment to protect consumers from risks in the pensions market.

The FCA’s has proposed some new measures to improve the pensions market. These include the ‘investment pathways’ proposal, which aims to introduce a simple objective-based choice architecture to help non-advised consumers make decisions about investing their pensions savings and a ban on firms defaulting consumers into cash or cash-like investments. Which? is broadly supportive of these measures but has raised some concerns about how it should be implemented.

Which? believes the FCA should be doing more to protect consumers from charges that are too high. Our submission makes two key recommendations:

• The FCA should introduce a charge cap to protect consumers that are not advised when investing in drawdown pension products.
• The FCA should commit to doing further work on the current ‘backstop’ options for consumers not engaging in the market. These are in reality defaults and Which? would expect the FCA to introduce a charges cap and independent governance for these products.

Which? has also called on the FCA to continue its support for a comprehensive Pensions Dashboard, which will allow everyone access all their pension information in one place.