TPR's Patrick Coyne: We have to make sure that people are supported into the right retirement pathway for them.
Pension professionals should take proactive steps now to deliver guided retirement solutions aimed at helping savers make the right choices, regulators urge.
In a joint podcast published last week, The Financial Conduct Authority (FCA) and The Pensions Regulator (TPR) said the industry needs to develop a much deeper understanding of the diverse needs and profiles within their scheme membership to ensure savers make the right decisions at retirement.
FCA head of asset management and pensions policy Nike Trost and TPR interim director of pensions reform Patrick Coyne called on the industry to innovate in the design and delivery of retirement income solutions tailored to different saver types – noting that using data such as age, pot size, and retirement proximity is "essential" to deliver tailored communications, targeted nudges, as well as fit-for-purpose decumulation solutions.
In the podcast they discussed how the FCA's Targeted Support proposals – designed to allow firms to make specific recommendations for groups or cohorts of consumers around pensions and investments – and the Pension Schemes Bill plans for guided retirement solutions are complimentary policies.
And they urged trustees to respond to the FCA's consultation on targeted support, which closes at the end of this week (29 August).
Coyne said: "Millions could be drifting toward an uncertain retirement. Government data shows over 14 million people are under-saving for later life. That is why we have to make sure the system provides them real value for money and that people are supported into the right retirement pathway for them.
"Nobody saves into a pension expecting a pot, they expect a sustainable retirement income and with these reforms, and the revived Pensions Commission, we have a real chance to make that happen."
Coyne said with targeted support becoming a new kind of regulated activity, trustees should respond to the FCA's consultation with examples of the kind of support they would like to give within the existing framework – especially ready-made suggestions for in-scheme benefits – to find out if this could be delivered themselves or with an FCA-authorised partner.
He added: "We know trustees want to support members, but uncertainty around the advice boundary is a real barrier. Now's the time to share examples and help shape future rules."
Trost added: "I think there being more support available for consumers both in their savings journey and importantly, at the point of retirement, has to be the success we aim for.
"It's about consumers being offered really good product choices to choose from in a really simple way."
Listen to the FCA and TPR podcast in full here.
