FCA’s Retirement Outcomes Review – comment

by | Jun 28, 2018

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A selection of comments regarding the FCA’s Retirement Outcomes Review:

Stephen Lowe, group communications director at specialist financial services company Just Group, said: “Today’s report has something of the good, the bad and the ugly about it.  Good news that the FCA has recognised the detriment to consumers caused by the existing annuity information prompts and is amending these.  Bad news that the current varied levels of customer understanding of the options available to them under freedoms is creating a ‘risk of harm’ for consumers. And just plain ugly is the lack of any immediacy to create a new social norm of guidance usage, to actively address the very real ‘risk of harm’ it has identified.”

Jeanette Makings, head of financial education at Close Brothers, said: “Good communication is vital to help people make informed choices about their retirement and in particular their decisions around pensions. Therefore, it is encouraging that the FCA is placing this at the heart of its recommendations. With pension freedoms and the growing prevalence of defined contribution pensions, many people feel ill-equipped to make decisions without guidance or advice.

“Individuals need to be given the tools and the confidence to make both comparative choices between providers and evaluate their existing provider. Unbiased financial education delivered in their workplace in the years ahead of retirement is invaluable in preparing them for these important decisions. So as well as calling for more from providers, it is also essential that we remember the role of employers as a trusted communication channel to reach many employees and engage them with their pension and retirement planning and how to navigate often complex financial decisions.”

PIMFA Senior Policy Adviser Simon Harrington said: “This report strikes the right balance between protecting the most vulnerable consumers and encouraging consumers to exercise their individual freedom and choice.

“The introduction of multiple investment pathways hopefully overseen by strong, independent governance in a restricted choice architecture framework is a particularly welcome recommendation which should encourage consumers to fully understand their retirement options without fear of making the wrong decision. We believe that this is a logical solution to the disconnect between the principles of freedom and choice and automatic enrolment respectively.

“However, we want to be clear that whilst investment pathways are a welcome addition to the landscape to support non advised clients, we remain of the view – supported by the report’s findings – that individual outcomes will be better on an advised basis. We believe that the move to send out wake up packs at 50 will help engage individuals sooner, but believe that within them the advice allowance should be flagged alongside a requirement for providers to offer it. This is an missed opportunity that we are urging the Regulator to reconsider.”

Chris Knight, CEO, Legal & General Retail Retirement said: “Pensions Freedoms was a game changer for retirement planning, but these findings from the FCA raise the question of whether we’re all prepared to make hard choices about how we access our pension pots.

“A growing number of people are reaching later life without taking advice or even guidance to help them make informed decisions, and many are continuing to take what the FCA describes as the ‘path of least resistance’.

“Engagement is key. We all need to do more to communicate earlier and more clearly to those approaching retirement. For Government, that means delivering on the Pensions Dashboard. For industry, it means working together to support the advice market and encouraging individuals to plan for retirement earlier, whether through a Mid-Life MoT or with clear guidance to help them better understand their options.”


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