Speaking about implementation, the provider of the UK’s biggest commercial master trust1 said delivering meaningful reform will require close alignment between the FCA and the DWP, so changes apply consistently across both contract-based and trust-based schemes. Without a coordinated approach, it warned there is a risk of a regulatory divide emerging that leads to uneven protections for savers and unnecessary complexity for schemes.
The provider added that the proposals will need to work alongside reforms in the forthcoming Pensions Schemes Bill and further action should be taken to address practices such as the use of incentives, if they are to deliver consistent protections across the market.
Assessing the proposals themselves, People’s Partnership said they represent, in principle, a clear improvement on the current transfer process, which focuses on speed and convenience rather than quality of outcome. It welcomed the FCA’s focus on clearer information and better decision-making, adding that implementing reforms now, even if they are refined over time, would be preferable to maintaining the status quo.
Patrick Heath-Lay, CEO of People’s Partnership, said: “The FCA’s proposals around improving the pension transfer process are a significant step in the right direction but they will only work properly if they apply across the whole market and align to the wider pension bill reforms.
“Unless these measures apply to trust-based pension schemes, there is a risk of creating a divide for millions of pensions savers. We are calling on the DWP to act quickly and introduce regulations at the same time as those that the FCA is proposing for contract-based pension schemes.
“We need to ‘walk in the shoes of savers’ who have little, if any, understanding of retail vs workplace pensions or indeed contract vs trust-based schemes. These reforms need to be centred on savers and as such regulatory parity must be central to the changes. Fragmenting the rules would add unnecessary complexity, increase administration costs, make the system harder to navigate for schemes and expose savers to unnecessary risk.
“A single, aligned approach is within reach. Regulatory consistency would support a simple, whole-of-market solution that protects all savers, supports the wider value for money agenda and avoids adding avoidable burden to the system. We believe the proposals could be strengthened further by including an outright ban on incentives, which have no place in pension transfer decisions.”
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