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Regulators set out joint 5-10 year vision for pensions sector

22 October 2018

The Financial Conduct Authority and The Pensions Regulator have joined forces to deliver better outcomes for pension savers and those entering retirement.

In an effort to tackle the challenge of people not having adequate income or the income they anticipated in retirement, the FCA and TPR have set out their vision for the pensions sector over the next five to 10 years.

The joint strategy aims to provide pensions and retirement income products that “support people and increase financial provision for later life” – pensions that are well-funded, well governed and deliver value for money.

Together, the pair will carry out a review of the entire consumer pensions journey, taking an in-depth look at the tools needed to enable people to make considered decisions about their pensions, as well as use their influence to drive value for money for members of pension schemes. This includes setting and enforcing clear standards and principles where relevant.

Christopher Woolard, FCA’s executive director of strategy and competition, said: “We have worked closely with TPR to produce a co-ordinated and cohesive strategy that will produce positive results for people in or approaching retirement. But success in delivering this strategy doesn’t just depend on action by us. With the support and collaboration of the government, industry and consumers themselves, we can deliver an environment which contributes to people having higher incomes in their retirement.”

Commenting on the joint strategy, Steve Webb, director of policy at Royal London, said it was a “good sign” when regulators work together to pull in the same direction.

He said: “All too often government and regulators investigate individual financial products or specific points in people’s lives such as retirement. These plans are helpful because they will look at the whole of our ‘pensions journey’ from starting work to being enrolled into a pension through building up a pension pot and making choices at retirement and through retirement. This should help them to see the bigger picture and produce better outcomes in the long term.”

Ian Browne, pensions expert at Quilter, was in agreement that amid ongoing tinkering from all sides, a more “coordinated and holistic” approach can only be positive.

“The joint strategy is not a game changer in terms of action points, but it is in terms of setting them on a path of being a combined front. Which offers the public and the industry a glimmer of hope for future stability in the pensions arena.”

Browne said there has long been a desire for pension policy to be handled independently of the government in a similar way to how the Bank of England sets interest rates and the launch of the TPR and the FCA initiative is a stepping stone in the right direction.

He added that the announcement of a review into the consumer journey has potential “to help the industry ensure its communications are effective.”

Referring to the review of the consumer pensions journey, Aegon’s pensions director Steven Cameron said is was “particularly welcome”.

He commented: “Many industry initiatives and regulatory interventions are already making improvements at particular points in the consumer’s journey but there can be disconnects in approaches to communication. The goal must now be to step back and examine how best to join up the journey, with timely advice and guidance to achieve a real breakthrough in consumer engagement, understanding and informed decision making.”

Professional Paraplanner