Aegon has urged the Financial Conduct Authority to defer its proposals on non-advised defined contribution pensions consolidation until 2030.
In response to the FCA’s consultation ‘Adapting our requirements for a changing pensions market’, which closes on 12th February, Aegon said the proposed interventions around non-advised DC consolidation should be put on hold pending roll-out of wider government pensions consolidation initiatives.
It warned that while intentions are good, it is “not the right time” to introduce major changes within the DC market.
In December, the regulator announced it was consulting on rules to better support consumers using digital pension planning tools and consumers making non-advised decisions to transfer their DC pension.
It said an increased reliance upon DC savings places greater responsibility on consumers to save enough for their retirement and presents “significant, complex” choices about how to use those pension savings through retirement.
It noted that while savers may want to consolidate their pension pots, with demand for consolidation set to increase with the introduction of pensions dashboards, it is important that they consider all aspects of consolidation. It warned that few consumers who transfer consider factors such as fees and charges, investment choices, decumulation options or the potential loss of guarantees or benefits.
In response, the FCA has proposed to introduce a new step in the non-advised transfer process, which would enable consumers to compare certain core aspects of their existing scheme and the potential new scheme before they can formally request to start a transfer. It is designed to help customers identify whether any valuable benefits would be lost on transfer and how ceding and receiving schemes compare.
Additionally, the proposals will result in consumers being provided with information about their FCA regulated DC pensions in a single package from one source, rather than via multiple communications in varying formats from different providers at different times.
However, Steven Cameron, pensions director at Aegon, said it was not the right time to introduce major changes.
He said: “We support the policy intent of ensuring members are protected from losing out, but with so many other major changes underway across the pensions market, now is just not the right time for the proposed changes.
“Pensions consolidation into modern pensions can be very good for individuals, making it easier for people to manage their pension, supporting better engagement, simplifying investment and ‘at retirement’ decisions, and often leading to lower charges. But the proposals could inadvertently discourage some from consolidating just when the Government is pushing for widespread scheme and small pot consolidation, partly to benefit the UK economy.”
Cameron warned that “extensive data” risks overwhelming individuals and could lead to many giving up on beneficial consolidation.
“Millions of people have multiple pensions and will struggle to compare receiving and ceding pensions across 20 suggested aspects, some of which may be of little relevance to the individual’s circumstances,” he noted.
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