The Pensions Regulator (TPR) and the Financial Conduct Authority (FCA) have launched a call for input on what they can do to help investors make informed decisions that lead to better pension saving outcomes.
The pensions consumer journey is made up of the decisions savers make and the touchpoints they have with their pension savings, which has become even more complicated over the last few years since the introduction of auto-enrolment and pension freedoms.
The regulators said investors “struggle to engage” with the industry, which means they can fail to make decisions that optimise their savings, remain in poor performing products and are susceptible to scams.
The TPR and FCA want to hear the thoughts from members of the pensions industry about how they can improve consumers’ retirement journey.
They want to know:
- Have we identified the correct overarching harms in the consumer journey? If not, what others are there?;
- Have we identified the main behavioural biases which influence saver engagement with pensions? If not, what others are there?;
- Have we identified the right structural issues? How can the pension consumer journey be improved to address poor outcomes caused by structural issues?;
- Are there other barriers to engagement that we have not identified? Are there solutions to the barriers to engagement that regulators, industry or others should consider?;
- What data do you use to monitor and improve engagement by different cohorts of consumers? How can we encourage the pensions industry to use behavioural insights and biases to engage consumers?
- What lessons from other industries could the pensions market use to drive the use of technology as an engagement tool and what would stakeholders find it useful for regulators to do to facilitate innovation?; and
- Are there areas of regulatory overlap between TPR and FCA causing problems for the consumer journey? If so, what would mitigate these?
The call for input will be open until 30 June 2021.
‘Step in right direction’
Tom Selby, senior analyst at AJ Bell, said: “Pensions have been crying out for a more joined-up approach between the two main regulators for years.
“This call for input feels like a genuine step in the right direction on that front, assessing the pension saving journey from cradle-to-grave. This approach should help ensure interventions are applied in the same way across different types of pensions.
“Furthermore, it offers an opportunity to review and hopefully simplify the communications providers are currently required to send out to savers. We know from various pieces of behavioural research that, when it comes to improving understanding of concepts like retirement saving, for most people less is usually more.
“The rules governing pensions communications have been built up over years and often lead to far too much paperwork being sent out to savers which, frankly, most people simply chuck straight in the bin.
“As the government strives to introduce simple two-page annual statements and pensions dashboards development continues, now feels as good a time as any to conduct an overarching review to make sure the communications rules are fit for the 21st century.
“This in turn should help ensure more savers are armed with the information they need to make good decisions with their hard-earned retirement pot.”
