TPR and FCA publish feedback on consumer journey call for input

The Pensions Regulator (TPR) and the Financial Conduct Authority (FCA) have published a feedback statement in response to their call for input on what can be done to help engage consumers to make informed decisions for better pension outcomes.

In May 2021, the regulators launched a call for input on the consumer pensions journey, asking the industry for feedback on how to improve decision making and outcomes.

They received 49 responses, with a “wide range of views” expressed, although several themes “consistently emerged”.

The statement said that most respondents agreed that the stages of the consumer journey that were set out in the call for input provided a broad basis for engaging the consumer, although respondents noted that the journey was highly personalised and non-linear, with consumer decisions and touchpoints mainly shaped by people’s life events.

Due to this personalised journey, respondents generally believed that savers need tailored support throughout their lifetime.

However, many in the industry noted that low levels of financial literacy meant it was difficult to communicate with consumers about pensions.

According to the regulators, most respondents agreed that TPR and the FCA had highlighted most of the structural issues affecting pensions, but that many of the issues reflected wider issues in society.

“Some respondents offered potential mitigations to inequalities in pensions outcomes associated with gender and religion, such as offering support to women returning to work or improving access to sharia-compliant funds,” the feedback statement said.

Several respondents, particularly master trusts and large providers, said they would like to do more to support consumers but were concerned about straying into regulated advice or unsolicited market activity.

These respondents emphasised the importance of consumers receiving the right support at the right time to achieve good outcomes, including clear and easily understandable communications.

Some responses noted that the complexity of mandatory communications meant that some savers could become disengaged, while pensions dashboards were highlighted as a means that could boost pensions engagement.

“Respondents, particularly trade associations, said that regulators, government and other interested parties should ensure their efforts are coordinated,” the feedback statement continued.

“They should work towards the same objectives to avoid contradictions or duplication of efforts.

“However, respondents recognised that despite any efforts to encourage engagement, many savers may never engage with their pension. This is why it was important to drive for value for money in DC schemes.”

Following the responses to the call for input, TPR has committed to conducting an equality report to understand how well the market works for different groups of people to inform regulatory responses, review the 'communicating to members' section if its DC guidance, publicise Midlife MOT toolkits available for employers and encourage larger schemes/providers to provide support, and work with the Money and Pensions Service to produce guidance to help employers support staff returning to work.

The FCA committed to making rules in relation to the Consumer Duty and explore firms' concerns around providing more support to customers about accessing their pensions and discuss options for giving consumers greater support within the current regulatory framework, while also considering further FCA interventions beyond the 'Stronger Nudge' to support consumer decision-making.

The regulators will also publish an update to the joint strategy in H2 2022 that will outline their shared strategic outcomes.

Commenting on the statement, TPR executive director of regulatory policy, analysis and advice, David Fairs, said: “The changing nature of work and retirement means there can’t be a one-size fits all approach to delivering good engagement with pensions and we look forward to working with industry on innovations that help deliver communications that work for all savers.

“As government, regulators and industry we should be clear on the outcomes we want to achieve and work towards enhancing and protecting all savers’ pensions.

“Respondents’ feedback confirmed the need for us to be explicit in our goals and reinforced the importance of driving value for money across the pensions saving journey. We will use these insights to guide our future work and help consumers make the most of their retirement savings.”

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