The Financial Conduct Authority (FCA) has launched a consultation on a series of measures that are designed to protect consumers, increase engagement and promote competition in the retirement income market.
The consultation goes alongside the publication of the final report of the Retirement Outcomes Review in which the FCA took an in-depth look at how the pensions and retirement income sector has been working since 2015 when pension freedoms were launched by the then Chancellor of the Exchequer George Osborne.
The FCA found that while consumers have overall welcomed these new freedoms, some are at risk of harm. In one example cited by the FCA, it estimates that some drawdown customers could receive 37% more retirement income from their pot every year by investing in a mix of assets rather than cash.
The measures will help consumers at key points in their retirement journey when they make key decisions about their pension pot, as well as providing ongoing support once they have accessed their pension savings. They include improvements to the clarity and timings of communications before people have to make decisions about their pension pot as well as simplifying the options that people have, and the ongoing communications that they receive.
Commenting on the consultation, Christopher Woolard, Executive Director of Strategy and Competition at the FCA said:
"We know that the choices introduced by the pension freedoms have been popular with many consumers. However, they're now required to make more complicated decisions than ever before. Many people need more support when making choices. The measures we have outlined today will help them think about that earlier, create investment pathways to help them with their choices and make costs and charges easier to understand."
"This is an important market that is still relatively new and is continuing to evolve. This is not the end of the work we are doing and we will continue to keep the market under review as it develops."