Inadequate retirement income pensions' ‘central challenge’ for 2019 - FCA

Consumers lacking an “adequate” retirement income is the “central challenge” facing the pensions sector in 2019, according to the Financial Conduct Authority (FCA).

In its Sector Views 2019 published today, 10 January, the FCA said that despite master trusts recording almost 2.8 million new members in 2017, overall contribution rates continued to be lower than 6 per cent.

The report also highlights areas such as pension scams, poor value and unsuitable products which contribute to the central concerns.

Hargraves Lansdown head of policy, Tom McPhail, said: “For all the recent successes of auto-enrolment and pension freedom, investors still face significant risks in saving for retirement. Average contribution rates have fallen and many millions of people either aren’t saving enough, or simply aren’t saving at all.

“We’ve laid some really positive foundations for peoples’ futures; the essential solution for policymakers, regulators and the pensions industry now lies in making it simpler and easier for individuals to engage with pensions and plan for retirement.”

There was some sign of this, with the report noting that three of the biggest pension providers, covering over half of the 9.3 million savers, announced design updates to their products, in order to align more closely with the retirement choices consumers now have, as a result of pension freedoms”.

According to the FCA, defined benefit to defined contribution transfers continued to rise in 2017, however, the overall impact of pension freedoms on the retirement income market has started to stabilise.

Low levels of consumer confidence, consumers who are not being enabled to make good decisions and inadequate support for those that are, were also highlighted as key concerns.

The regulator highlighted macro-economic developments and societal changes, such as increasing individual financial responsibilities and an ageing population, as key drivers of the transformation.

Additionally, the FCA said that the sector was also struggling with legacy system issues, with new technologies holding the prospect of a lower cost and more holistic retirement.

Commenting, Quilter pensions expert, Ian Browne, said: "It is vital that this area is appropriately regulated, but the deluge of changes seen over the past number need to embed first.

“Indeed, for the industry to consider potential solutions to some of the new societal challenges facing generations they first need to be confident that the rules they are structuring those solutions around will not change.”

    Share Story:

Recent Stories


FREE E-NEWS SIGN UP

Subscribe to our newsletter to receive breaking news and other industry announcements by email.

  Please tick here to confirm you are happy to receive third party promotions from carefully selected partners.


Helping the credit challenged get mortgage ready
A rising number of borrowers are finding it harder to access mortgages due to being credit challenged - whether that’s from historic debts, a county court judgment, or having little to no credit history.

In the latest episode of the Mortgage Insider podcast, Phil Spencer is joined by Eloise Hall, Head of National Accounts at Kensington Mortgages, and Alastair Douglas, CEO of TotallyMoney.


Inside the world of high net worth lending
The mortgage market continues to evolve, and so too does the answer to the question: what is a high net worth individual in today’s market? In this episode of the Mortgage Insider podcast, host Phil Spencer is joined by Stephen Moroukian, Head of Product and Proposition for Real Estate Financing at Barclays Private Bank, and Islay Robinson, founder and CEO of Enness Global. Together, they explore what brokers really need to know when supporting high net worth individuals.

The future of the bridging industry and the Autumn Budget
MoneyAge content editor, Dan McGrath, is joined by head of marketing at Black & White Bridging, Matt Horton, to discuss the bridging industry, the impact of the Autumn Budget and what the future holds for the sector.