The City watchdog is keen to make sure the pensions market keeps ticking over, and has revealed today just how it plans to do it.
The Financial Conduct Authority (FCA) is conducting a Retirement Outcomes Review, with a full report expected to be published next summer, and has today laid out what precisely it plans place under its microscope.
Topics of concern highlighted in the terms of reference include the ease of shopping around for and switching annuity products, what effect red tape is having on people's retirement options and what prevents people from taking advice on their retirement choices.
"For a competitive and innovative market, it’s crucial that the market develops in a way that allows consumers to engage with their options, shop around, and switch providers where appropriate," said Christopher Woolard, director of strategy and competition at the FCA. "We also want firms to compete hard for business, offering good outcomes for consumers through lower prices, products and services that meet customer needs, better customer service and wider choice.
"Since the introduction of the pension reforms there have been a number of key market developments. We want to assess how competition is developing in the retirement income market by investigating how firms and consumers have responded to the new freedoms."
Jon Greer, pensions technical expert at Old Mutual Wealth, would like the watchdog to examine the role of advice in relation to drawdown products.
"Before the pension freedoms were introduced in April 2015 there was effectively no such thing [as non-advised drawdown], and a customer also needed to have £30k per annum secure retirement income from other sources before they could even consider the type of drawdown flexibility on offer today," Greer explained. "As the rules have changed it is entirely right that the FCA is looking at how customers come to their decision to take their retirement income in this way."
Following the introduction of the pension freedom rules last year, those aged over 55 have been able to access their pension pot without first purchasing an annuity.