Pensions consumer journey; aka -“the mess we’re in”

It’s been over the year since the FCA and TPR produced a strategy paper on the “consumer journey“, enough time for most of us to have forgotten if we ever read it, let alone responded to it. Now we have a collation of our feedback (but no list of respondents). I remember being puzzled by the point of the first paper and I’m no better informed having read the feedback. You can read the paper in FCA livery here and in TPR livery here.

For the most part the feedback paper confirms what we already know, that save for those in the public sector- no one is going to sort out our retirement affairs but us. The consumer journey is a long and lonely one.

Most consumers are in DC pension schemes where, whether they know it or not, they are responsible for their own retirement outcomes. Alongside this, pensions freedoms now mean that people have more choice about how and when to access their savings.

If pension savers are to achieve good outcomes for their personal circumstances in this changed world, a number of decisions have to be made – either directly by consumers themselves or by trustees, providers or employers acting in the best interests of consumers.

For those with a socialist predisposition, this is darwinism, the fit will prosper, the vulnerable will fall by the wayside. The weak   “struggle to make decisions that optimise their pension saving, remain in badly performing products, and are susceptible to scams“.

The feedback lists all the initiatives that the FCA and TPR are considering or have implemented to protect consumers and hands this rather hot potato on to the DWP

As set out in our joint Value for Money feedback statement published on 24 May 2022,the Government has expressed its willingness to legislate to introduce the value for money framework for the schemes regulated by TPR, and we will work closely with DWP to achieve this. We aim to consult on our proposals towards the end of 2022.

So as long as you are in a scheme regulated by tPR (an occupational DC workplace pensions) you can expect to get “value for money by default“. I’m not sure if this phrase is a clever bit of wordsmanship or the name of a new policy, but I rather like it.

The direction of travel seems to be along default lines “follow the yellow brick road and we assure you that you’ll get value for your money”.

And the yellow brick road on which we consumers make our journey is lined with signposts and service stations where we can call in for “mid life MOTs” or guidance from Pension Wise on the splits in the road that are coming our way (called investment pathways). It’s all very comforting and having met one of the collaborators in this road construction after a day’s meeting of ABI and PLSA heavyweights, I’m sure that everyone is “travelling in the same direction”. The direction last night seems to have been to the nearest public house.

Of course there are a few of us who choose not to travel the path most travelled – the self-employed and (though they aren’t mentioned in the paper) those people who have chosen to care for others on an unpaid basis). The FCA are apparently concerned that consumers who take out a non workplace pension (a SIPP) have to make investment decisions without advice or guidance (this also goes for  top-up pension plans for those in DB schemes). We are to hear more about how this can work later in the year.

The FCA’s input into the paper is to stress the work it is doing to define the perimetre between guidance and advice (something AgeWage spent 6 months in the regulatory sandbox discussing). Although it has been moving towards “stronger guidance” , the FCA make clear in the paper they are not looking to introduce new rules but rather rely on the Consumer Duty which is being introduced in July. The Pensions Regulator appears to be relying on MaPs and its Moneyhelper website. My view is that MaPs should be integrating what it does with what is going on in the private sector so that its reach can extend a little further than it does today.

The paper concludes with a series of bullets as a final attempt to justify the initial paper and the year’s wait till the publication of this feedback.

While this may look like progress, when compared with the radical measures being taken in Australia to get people to take notice of their savings and make sensible decisions, it doesn’t look vey impressive. Infact it looks like a “charter to meddle” with no big idea.

The Australians have found a name for its engagement project  – it’s  “The Retirement Income Covenant”. The regulator sets down a clear way for pension funds (Supers) to help those with these hard choices to find a way to convert pot to pension. It is the absence of this big idea, that makes the current work on engagement appear meddlesome rather than helpful.

Let’s hope that the work being conducted over the summer by the DWP on Value for Money and on Decumulation – will lead to our version of a “Retirement Income Covenant”, to lead us out of  7 years of pension anarchy. Right now this feedback paper is an accurate reflection of the mess we’re in.


About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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