Pension providers will have to give more support to savers accessing their pension pots in future, under plans confirmed by the regulator today.
The Financial Conduct Authority (FCA) says it is forging ahead with recommendations it first outlined in December 2014, when its report into the retirement income market found competition wasn't working well for consumers (see the Annuity sales practices failing pensioners, says FCA MSE news story).
Annuities are a one-off purchase that people make when they retire, which converts their pension savings pot into a fixed annual income for the rest of their life. But the FCA's study showed that many consumers were missing out by not shopping around for an annuity and switching providers.
As a result of these findings and in light of radical pension reforms coming into force this April, the FCA has today confirmed it wants to see the following changes take place:
- Requiring firms to provide a cross-market annuity quotation ranking system so that people can easily identify if they could get a better deal by shopping around. The rankings are currently being developed by the FCA, but it will see quotes placed in order of how they best suit the person.
- Redesigning the information consumers receive from providers, such as wake-up packs, in the run up to their retirement. Currently savers get wake-up packs four-six months before they retire but the FCA is looking at what information should be included in them.
- The creation of a pensions dashboard, which will allow consumers to see all their pension pots in one place.
The first two changes outlined above will be trialled this year and are expected to take effect next year, however the FCA says creating a pension dashboard will take longer to implement and it has no date for when this may be completed.
The FCA adds that it will continue to monitor the market as well as the take up of the Government's Pension Wise guidance service.
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'Ensure the market is fit for purpose'
Christopher Woolard, director of strategy and competition at the FCA says: "The retirement income market is set for the biggest change in a generation. Over the next 12 months we want to ensure that the market is fit for purpose in the new landscape.
"We received considerable support for our proposals and we will be working with Government and the industry to implement all of our recommendations so that consumers can have confidence that they are getting the best possible outcome when making decisions on their retirement income."