Retirement wake-up packs should start from age 50 to ensure better engagement for customers, the regulator's Retirement Outcomes Review has concluded.
The Financial Conduct Authority's (FCA) review of the post-pension freedom retirement landscape found that, while consumers value the changes to how they can access their savings, many were not obtaining value for money.
It outlined a range of measures designed to better protect consumers, improve engagement and promote competition within the market.
The FCA is proposing that ‘wake-up' packs should be sent to customers from the age of 50 and then every five years until the customer has fully accessed their pension pot.
The new ‘wake-up' packs are to include a single-page summary - also known as a ‘pensions passport' - and firms have to include specific retirement risk warnings at the same time as the new packs, the watchdog said.
It added the new communications have been designed to address the lack of consumer engagement and help consumers engage with the risks and choices they face and prompt them to access the support and guidance they need.
The regulator has also proposed introducing "investment pathways" for drawdown investors to ensure they obtain better value for money.
It added all consumers who have accessed their pension should receive information from their provider annually, whether or not they are currently drawing an income from their pot. Additionally, the FCA said it wanted this information to include the actual charges paid in pounds and pence.
'More complicated decisions'
The FCA found that, at present, some consumers do not receive annual information and for many who do, information on investment returns and annual charges is not given.
FCA executive director of strategy and competition Christopher Woolard said: "We know the choices introduced by the pension freedoms have been popular with many consumers.
"However, they are 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."
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