The FCA today published its Retirement Outcomes Review – Terms of Reference. The review aims to explore the impact of the newly introduced pension freedoms and if anything needs to change.
The focus is on four key areas; Shopping around and switching. Non-advised consumer journeys. Business models and barriers to entry. Impact of regulation on retirement outcomes. The deadline for responses to the questions posed is 31st August 2016, with a final report due to be published in summer 2017. Separately the FCA announced it would consult on requiring pension providers to include a comparator showing the additional annual income which could be obtained by shopping around for an annuity.
This comes on the back of research that shows people are over 3 times more likely to shop around for an annuity when they are shown the difference that it could make to them. Nathan Long – Senior Pension Analyst said: ‘Engaged pension investors are better placed to navigate retirement. Those shopping around to buy an annuity receive higher incomes, whilst those opting to self-manage via income drawdown are taking sustainable levels of income and investing wisely.
It is great that this work by the FCA will ultimately lead to a jump in the number engaging with their retirement. Shopping around for an annuity is now more important than ever as rates are at all-time lows. Retirement is extremely personal as no two people are the same. The challenge is to ensure information can engage members with their decision making early enough so that they can confidently take control of their financial future.’
