CP18/17: Retirement Outcomes Review: Proposed changes to our rules and guidance

Open consultation: CP18/17
28/06/2018
28/06/2018
Consultation closes
06/09/2018
Policy Statement
Q1 2019

This consultation sets out our proposed package of remedies from the Retirement Outcomes Review. For some of our remedies we are consulting on proposed changes to our rules, for other we are seeking feedback on discussion questions.

Read the summary of CP18/17 (PDF)

Read the full consultation (PDF)

Our remedy package aims to address the harms and emerging issues we have identified, and to put the market on a good footing for the future. It balances the need to protect consumers and improve competition in the market, with allowing the market to further develop and innovate.

We are taking steps to protect customers and help them make better choices – before accessing their pension savings, at the point of making a decision, and throughout their retirement. Our key remedies are set out below.

Before consumers access their pension savings – better communications, support and guidance

We want to improve the effectiveness of consumer communications and ensure consumers access the support or guidance they need.

We are proposing changes to the ‘wake-up packs’ so that they reach consumers at the right time to inform their decision, and are more useful to them. We are consulting on proposals to require that ‘wake-up’ packs:

  • incorporate a one-page ‘headline’ document, in clear and accessible language
  • are sent earlier in the process, from age 50, and every five years thereafter until the pot is accessed
  • include risk warnings, from age 50 onwards

At the point of entering drawdown or buying an annuity

We are seeking feedback from stakeholders on proposals that:

  • providers should offer ready-made drawdown investment solutions, within a simple choice architecture (‘investment pathways’), which reflect standardised consumer objectives
  • new consumers accessing drawdown will have to make an active choice to be in cash. We also expect firms to have a strategy for dealing with consumers who have already been defaulted into cash, and who are unlikely to be best served by this investment strategy

We are also consulting on the following proposals:

  • firms provide a summary showing key information at the front of the Key Features Illustration (KFI) that consumers receive, including a one-year charge figure in pounds and pence which is comparable across KFIs
  • firms make consumers aware of their eligibility for an enhanced annuity

We are also working closely with the Money Advice Service (MAS) and the Association of British Insurers (ABI) to develop a drawdown comparator tool.

Once a consumer has entered drawdown 

Once a consumer has entered drawdown they still need information and support.

  • We are consulting on a proposal that providers should send information to their customers in drawdown annually, whether or not they are currently drawing an income from their pot.
  • We are seeking feedback from stakeholders on whether firms should remind their customers annually of their chosen investment pathway and their ability to switch.

Who this applies to

This consultation will primarily be of interest to firms providing pensions, annuities and income drawdown.

This consultation will also be of relevance to stakeholders with an interest in pensions and retirement issues, including:

  • individuals and firms providing advice and information in this area
  • distributors of financial products, in particular retirement income products
  • asset management firms
  • trade bodies representing financial services firms
  • consumer representative groups
  • charities and other organisations with a particular interest in the ageing population and financial services

Consumers will also be affected by this consultation. We welcome views from consumers on all of our proposals.

What you need to do

We want to know what you think of our proposals for consultation and discussion in this Consultation Paper. Please send us your comments on our proposals for discussion (questions 1-33 and 47-49) by 9 August 2018. Please send us your comments on our proposals for consultation (questions 34-46) by 6 September 2018.

Online response form

You can also:

  • email your responses to [email protected]; or
  • write to: Adam Summerfield and Richard Wilson, Financial Conduct Authority, 12 Endeavour Square, London E20 1JN

Next steps

For the proposals we have raised for discussion in this Consultation Paper but are not proposing to make rules on now, we will consider your feedback - and whether we need to refine the proposals we have put forward in this Consultation Paper - and will consult in January 2019.

For the proposals we are consulting on in this Consultation Paper, we will consider your feedback and publish our finalised Handbook text in a Policy Statement in January 2019.