Steven Cameron, Pensions Director at Aegon said:“Having looked extensively at workplace pensions and retirement markets, the FCA is now looking at the ‘missing piece’ represented by non-workplace pensions.
“It’s positive to see confirmation that charges on non-workplace pensions taken out recently are substantially lower than in the past, particularly compared to pre 2001. The clear indication that charges are lower for larger pots is also as we’d have expected, and reflects both competitive forces and the element of fixed costs in administering pensions. The majority of those with non-workplace pensions either have or have had advice, and we’d like the FCA to give greater recognition to the role advisers play in consistently pushing providers to offer a competitive charge.
“While most individuals who take out a non-workplace pension do so with the help of an adviser, we accept that not all existing customers are receiving ongoing advice. For them, the challenge of encouraging ongoing engagement including on contribution levels, investment choices and retirement options has similarities with workplace pension members.
“The FCA is considering remedies around improved disclosure, simpler charges, default investment funds and potentially price interventions. Such interventions are easier to make for new policies than for those individuals already hold. For the millions with legacy pensions or small inactive pots, a faster and potentially simpler way of helping them would be to encourage consolidation into newer, lower charged, digitally enabled products.
“People do need help here, ideally from their adviser, but there may be a role for providers to extend guidance services regarding consolidation, including to ensure individuals don’t lose out on any valuable benefits such as guaranteed annuity rates. We’d urge the FCA to consider this as the arrival of pension dashboards will show an individual all their pensions together with the potential to stimulate improved engagement, competition and consolidation.”
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