Pensions - Articles - Comment on FCA consultation on extending the role of IGCs

 Steven Cameron, Pensions Director at Aegon said: “IGCs have been very effective in providing independent scrutiny of value for money for workplace pension members so it is no surprise that the FCA wants to utilise their skills more widely. IGCs were designed as an extra layer of protection for workplace pension members who are typically auto-enrolled into the scheme and the default fund, without taking advice or engaging in investment decisions. There are parallels with investment pathways which the FCA plans to introduce in July 2020 for customers who use income drawdown without seeking advice and who don’t feel confident making their own investment decisions.

 “IGCs consider value for money across hundreds of thousands or millions of workplace pension members who when accumulating investments often have broadly similar needs and objectives. However, when it comes to taking a retirement income through drawdown, needs are more personalised. This includes how much income to take, how flexibly and with what investment risk.

 Investment pathways will help individuals self-select from four different broad retirement objectives and in doing so help non-advised customers select a more suitable fund that they might otherwise have picked. The role of the IGC needs to reflect this broad categorisation and cannot go beyond this. Arriving at what’s best for any individual, based on their circumstances, investment risk profile and intended income needs advice.”