The Society of Pension Professionals (SPP) broadly supports the Financial Conduct Authority’s (FCA) latest proposals on adapting rules for a changing pensions market, while cautioning that regulators must avoid introducing unnecessary cost and complexity for schemes and providers.

Responding to the FCA consultation, Adapting our requirements for a changing pensions market, which closes this week, the SPP stated that it agreed with the overall application and scope of the proposed regime, particularly measures aimed at better supporting consumers using digital pension planning tools and those making non-advised defined contribution (DC) transfer decisions

The SPP added that it supported encouraging the use of stochastic models to project future investment returns, provided these were clearly explained, and welcomed the FCA’s intention to give firms flexibility in how they communicated outputs from pension modellers and digital tools.

It also agreed that the regulator’s proposals on record keeping, regular reviews and the triggers for applying the non-advised transfer rules were proportionate and reasonable.

However, the organisation argued the FCA should consider introducing guidance or limits on future growth assumptions used in projections, such as high-level caps or reference bands grounded in long-term expected market returns.

Alternatively, it suggested firms could be required to disclose how their assumptions compared with established market benchmarks, to improve transparency and comparability for consumers.

The SPP also warned that figures presented by pension modellers must be “useful and comparable” if savers are to make informed choices, and raised concerns that excessive flexibility could lead to inconsistent consumer experiences across the market.

In addition, it suggested that the proposed 12-month implementation period for changes to simulations in digital tools appeared overly ambitious and recommended a 24-month transition to allow sufficient time for consumer testing and system development.

Further concerns were raised about the FCA’s planned “acknowledgement process” for non-advised transfers, with the SPP stating that its members were not convinced the process would add value and warned it was likely to result in additional cost and complexity for pension schemes.

SPP DC Committee chair, David James, reiterated that the organisation shared the regulator’s objectives but urged caution over the cumulative impact of reform.

“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," he said.

"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.”

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