New proposals set out by Financial Conduct Authority (FCA) today would see financial firms offer bespoke advice for free to pension savers
A huge shake-up of pension rules could see millions of retirement savers get more help to manage their money.
New proposals set out by Financial Conduct Authority (FCA) would see financial firms offer free bespoke advice to pension savers. The idea would be that savers are given more help to increase their retirement savings. Currently, you have to pay a fee for tailored advice.
For example, it would allow firms to offer advice if someone is investing inappropriately, or if they don’t know how to take their retirement income. The rules for accessing your pension can be complicated and can have massive tax repercussions if you’re unsure how to access your savings.
The so-called “targeted support” would allow firms to provide guidance to customers based on suggestions developed for a group of similar consumers. The FCA is seeking views on its proposals by mid-February 2025. It expects to consult in summer 2025 on the rules that would create a new framework.
More than 16 million people in the UK save for their retirement into defined contribution (DC) pension schemes. This is the most common type of workplace pension scheme and is dependent on how much you have saved in your working life.
But according to the FCA 2024 financial lives survey, 75% of over-45s do not have a clear plan for how to take money from their pension or did not know they had to make a choice. Less than one in 10 (9%) adults have taken full regulated advice in the past 12 months, according to the research.
Sarah Pritchard, executive director of consumers, competition and international at the FCA, said: “We want people to have access to the help, guidance and advice that they need, at a cost they can afford, when they need it, so that they can make informed decisions. So, we are reviewing the boundary between guidance and advice across investments.
“We know people find pensions particularly difficult to understand, so we are deliberately starting with this to help consumers with their pension decisions. If we get this right, consumers will be better supported in making financial decisions. This will potentially lead to more people investing which will help provide capital necessary to stimulate economic growth.”
Pete Glancy, head of pension policy, Scottish Widows, said: “People want meaningful help from experts when it comes to making big decisions and financial experts such as pension providers need to find ways of steering people towards good outcomes and away from risky or damaging situations. The FCA’s proposals would allow us to have conversations with customers which were not possible before and this is therefore welcome.”
