The Financial Conduct Authority’s (FCA) targeted support regime could represent one of the most significant engagement shifts in pensions since the introduction of auto-enrolment (AE), according to the Association of British Insurers (ABI).

The regulator published its near-final rules for targeted support in December last year, with firms to be able to make suggestions to consumer segments without moving into personalised recommendations.

While the ABI felt the regime could be a game changer for engagement, it emphasised that its success would depend on the integration of data, segmentation, governance, and behavioural design into core propositions, alongside regulatory compliance.

It added that providers who embedded targeted support strategically, rather than treating it as a regulatory overlay, were likely to be best positioned to deliver scalable engagement and demonstrable consumer outcomes.

The association described targeted support as a new regulatory middle-ground, shifting the industry mindset from fear of straying into advice towards delivering structured, evidence-based support within regulatory guardrails.

Effective targeted support was likely to be driven by events rather than being static, the ABI added, resulting in a move away from annual, generic communications to dynamic, journey-based interventions.

“A technically credible targeted support model will depend on meaningful customer segmentation,” the ABI stated.

“Providers will need to move beyond simple demographics and incorporate engagement levels, pot size, retirement horizon, vulnerability indicators, and behavioural signals.

“Without this foundation, support risks being either too generic to drive action or too specific to remain within regulatory boundaries. Segmentation will therefore become a core governance tool as well as an engagement enabler.”

Addressing the engagement gap in long-term savings was highlighted as crucial, and poorly timed, overly generic, or complex communications were unlikely to influence decision making.

Therefore, the ABI believed the success of targeted support would depend less on the volume of communications and more on intelligent engagement design.

Firms were urged to focus on support rather than sales, although delivering this at scale would necessitate changes to operating models, the association noted.

“Building trust takes time,” the ABI stated. “Providers who embrace targeted support must be prepared to take a long-term view of the commercial benefits.

“The alignment with Consumer Duty is particularly significant. While the FCA has not prescribed rigid outcomes frameworks, firms will still need to demonstrate that their targeted support is delivering value and not causing foreseeable harm.

“In practice, this is likely to translate into proportionate monitoring of customer understanding, engagement behaviours, and decision pathways, supported by appropriate governance rather than purely interaction-led metrics.

“Over time, firms are likely to assess success through measurable indicators such as increased contribution rates, improved retirement readiness, reduced disengagement, and more appropriate product journeys.

“When embedded effectively, targeted support has the potential to reduce servicing costs, improve retention, and strengthen lifetime customer value while simultaneously meeting regulatory expectations.”

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