Fairs: "We should be clear on the outcomes we want to achieve".
There is an industry consensus that many of the structural issues affecting pensions are reflective of “wider issues in society”, The Pensions Regulator (TPR) and the Financial Conduct Authority (FCA) say.
The two regulators have today (7 June) published a response to their joint call for feedback on the ‘pension consumer journey' which encompasses how customer decisions about pensions at key life points can be improved.
TPR and the FCA published the call for input over a year ago - a move that was widely praised by the industry a positive example of the two regulators working effectively to unify expectations for both trust-based and contract-based schemes.
The regulators today said "several themes consistently emerged" in the 49 responses they received and confirmed there was all-round consensus on key issues and what more could be done.
In a statement, the regulators said: "Respondents agreed that we had highlighted most of the structural issues affecting pensions but said that many of the issues reflected wider issues in society. Respondents also recognised that despite any efforts to encourage engagement, many savers may never engage with their pension."
"This is why it was important to drive for value for money in defined contribution schemes," they added.
The regulators said the majority of respondents agreed that the stages of the consumer journey set out by them provided "a broad basis for engaging the consumer".
"However, respondents said the journey was highly personalised and non-linear with consumer decisions and touchpoints mainly shaped by people's life events, such as changing jobs or buying a house," TPR and the FCA noted. "Respondents considered this personalised journey meant that savers need tailored support throughout their lifetime.
"Different types of organisations across the pensions industry said that given the low levels of consumer financial literacy, there remains real difficulty in communicating about pensions."
TPR and the FCA said many respondents - notably master trusts and larger providers - had signalled interest in mitigating this by doing more to support customers. However, they also flagged familiar concerns about crossing the advice/guidance boundary.
"These respondents highlighted the importance of consumers receiving the right support at the right time to deliver good outcomes," the regulators said. "This included clear and easily understandable communications that take account of the way consumers access and process information."
The regulators said the feedback collected in the exercise had assisted them in identifying "further areas to explore".
"Engagement is a challenge that cannot easily be resolved through prescriptive regulatory interventions. Rather, it needs a range of measures," they stated. "Firms, schemes, providers and advisers, can and should do more to make pensions work well for consumers. There are a number of outcomes we want to see throughout the consumer journey. We want consumers to have access to products and services that are designed to meet their needs and characteristics and are fair value. They should understand the information they are given and be able to make informed decisions so they can act in their best interests and pursue their financial objectives.
"Ultimately, consumers should be able to have confidence in the pensions industry."
TPR executive director of regulatory policy, analysis and advice David Fairs said it was clear to the regulators that there could not be a "one-size fits all approach to delivering good engagement with pensions".
"As government, regulators and industry we should be clear on the outcomes we want to achieve and work towards enhancing and protecting all savers' pensions," he said. "We look forward to working with industry on innovations that help deliver communications that work for all savers."
