Financial Conduct Authority
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FCA seeks feedback on non-workplace pensions

The Financial Conduct Authority (FCA) has today published a Discussion Paper to gather views on the market for non-workplace pensions.

The FCA estimates that non-workplace pensions, also known as individual private pensions, collectively represent around £400bn assets under management. This is more than double the amount invested in contract-based Defined Contribution (DC) workplace pension schemes. Research suggests that at least 1 in 4 adults have accumulated benefits in non-workplace pensions.

The FCA is seeking feedback to better understand the market for non-workplace pensions, including whether competition is working well and if there are issues that need to be addressed in order to protect consumers.

Christopher Woolard, FCA Executive Director of Strategy and Competition, said:

“In recent years we, alongside the Department for Work and Pensions and the Pensions Regulator, have taken a number of steps to address weaknesses in the workplace pensions market. We believe it is now right to look at the other side of the picture and assess whether competition is working in non-workplace pensions.

“A diverse group of people save into non-workplace pensions and it is a growing market. We want to hear from anyone with an interest in this subject about how they think the market is working.”

The FCA is looking to understand how the differences and similarities between the workplace and non-workplace markets impact competition and consumer outcomes. The particular areas of focus include:

  • product complexity. Most pensions are complicated products and product performance may not become apparent for many years
  • the factors which may reduce consumer motivation and ability to invest time and effort in decisions related to their pensions
  • whether customers can identify and freely move to more competitive products
  • fund choice and the use of defaults. The FCA is concerned that informal defaults may be operating in the market for non-workplace pensions that are not subject to the same protection as defaults in workplace pensions

The FCA is also looking at whether providers are competing on charges and if there are barriers to consumers identifying, and choosing, from more competitive products.

The FCA is seeking feedback by 27 April 2018. The FCA will consider responses and will then look to collect data to better understand any problems identified.

Notes to editors

  1. Effective competition in non-workplace pensions: DP18/1
  2. Non-workplace pensions include individual personal pensions (IPPs), stakeholder personal pensions (SHPs) and Self Invested Personal Pensions (SIPPs) as well as Free Standing Additional Voluntary Contributions (FSAVCs), s32 buyouts, and retirement annuities.
  3. On 1 April 2013, the FCA became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
  4. The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
  5. Find out more information about the FCA.
Channel website: https://www.fca.org.uk/

Original article link: https://www.fca.org.uk/news/press-releases/fca-seeks-feedback-non-workplace-pensions

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