Pensions - Articles - Regulators must be wary of adding costs and complexity

The SPP agrees with the application and scope of the proposed regime. For instance, the SPP agrees that the use of stochastic models should be encouraged to project futures returns and agrees that firms should have flexibility in how they communicate the outputs of pension modellers and digital tools.

 

The SPP also agrees that record keeping, regular review proposals and the proposed triggers for the application of the non-advised transfer rules are appropriate and reasonable.

 

The SPP response calls on the FCA to introduce guidance or caps on future growth assumptions, meaning that these projections would either have to be grounded in expected market returns or that firms would have to disclose how their projects compare to market benchmarks.

 

Furthermore, the SPP states that figures provided to consumers by pensions modellers must be “useful and comparable” to allow savers to make well-informed choices.

 

The SPP has also expressed concern at what they say is an overly ambitious timeline for implementing the FCA’s proposed changes in relation to simulations in digital tools, recommending that this be extended from 12 months to 24, to allow for consumer testing of tools to ensure a positive user experience.

 

The SPP also states that its members are not convinced that the FCA’s planned “acknowledgement process” for transferring pension pots adds value, stating that this is likely to cause additional costs and complexities for pension schemes.

 

David James, Chair of the SPP’s DC Committee, said: “Like the FCA, the SPP would very much like to see a pension market that helps consumers navigate their financial lives, where pensions deliver value for money and consumers have the ability to make informed decisions. However, regulators must be wary of adding additional costs and complexity to this process, especially at a time when schemes are dealing with a wide range of other regulatory and legislative changes.”