The Financial Conduct Authority chief executive Andrew Bailey has said the pensions industry has a “responsibility” to offer greater decumulation products.

Speaking at the London Business School Annual Asset Management Conference yesterday, 26 April 2018, Bailey said that the implication of an ageing population and an increase of care costs in old age, means more responsibility for decision making was being placed on individuals in the decumulation phase, but that it also “places a responsibility on industry to provide products".

Last year the FCA released its Retirement Outcomes Review Interim Report, in which it argued product innovation had been limited to date, particularly around the mass market of consumers who do not take advice.

Delivering his speech, Bailey said: “Asset managers are very much in the forefront of these issues because increasingly you are providing the means of saving for old age, and the choices for consumers are becoming more complex at a time when – over quite a long period now – the responsibility for those choices has been increasingly transferred to consumers.”

Furthermore, Bailey said that the growing number of people reaching retirement could lead to a shift in the balance of assets under management from accumulation-orientated products to decumulation products, some of which will be “complex”.

Bailey argues that we have seen decision making responsibility move to the individual in the accumulation phases and that this trend has shifted to decumulation phase with the introduction of pension freedoms.

“Given the implications of an ageing population, low real interest rates and the cost of old age, it seems to me that greater choice makes sense in terms of individual circumstances and preferences.

"But it places a responsibility on industry to provide products and the regulator to establish conditions in which those choices can be made securely and confidently”, Bailey added.

Despite this, part of the industry feels that their isn’t a lack of innovation and that the industry should be “proud” of what they have achieved.

Speaking at the Association of British Insurers’ conference yesterday, 26 April 2018, Aviva head of savings and retirement Alistair McQueen hit back at the FCA's assertion that there is a lack of innovation in the retirement market, hailing auto-enrolment and pension freedoms as two big examples.

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