Retirement Outcomes Review: Proposed changes to FCA rules and guidance – Part 2
The LITRG welcomes the opportunity to continue our input into the Financial Conduct Authority's (FCA) work on the outcomes of the pensions freedom reforms and in particular the problems facing consumers resulting from these freedoms. The FCA have identified that, while pension freedoms have largely been welcomed, there is still an overall lack of engagement with pensions. In the second part of their wide ranging consultation following the Retirement Outcomes Review, they consider the introduction of new ‘wake-up’ packs, including a clear, single page summary, that should be sent to customers regularly from the age of 50, as one way of tackling this.
In our submission, we say that we broadly agree with the proposed changes, in particular, that they should start from the age of 50. We suggest that early packs should focus on helping recipients understand whether their retirement provision is adequate (rather than what to do with the money in their pot) – in case they need to and are able to build up more savings. Later packs should aim to encourage consumers to plan for their retirement, and to seek further help and support as necessary.
We also stress that they should contain a risk warning to address the specific problem that we keep coming across of people withdrawing their entire pension pots and putting the money in the bank instead – with no specific reason for needing the cash, and triggering completely avoidable tax charges and benefit withdrawal issues.
We are hopeful that at least one outcome of these initiatives is that more consumers will seek pensions guidance – it goes without saying that Pension Wise (and voluntary sector bodies that deal with pension queries, such as Tax Help for Older People) need to be set up to cope with the extra demand. We state that we would welcome a commitment that the necessary funding will be provided.
Our submission can be found here: Retirement Outcomes Review: Proposed changes to FCA rules and guidance – part 2 – LITRG response
LITRG's response to Part 1 of the Retirement Outcomes Review can be found here.
Paddy Millard