FS19/5: Effective competition in non-workplace pensions

Discussion Paper 18/1
02/02/2018
Consultation closed
27/04/2018
Feedback Statement 19/5
30/07/2019
30/07/2019

We have published our recent work on competition in the non-workplace pensions market. We are setting out the issues we have identified and seek stakeholder views to help develop our proposals for change.

Read FS19/5 (PDF)

Annexes to the feedback statement:

Consumer research:

Our findings

We found that a lack of consumer engagement, combined with complex and confusing products and charges, has led to a lack of competitive pressure in the non-workplace pensions market – covering £470bn of retirement savings.

Charges are too complex for consumers to be able to compare. Similar customers can pay very different charges – those paying the highest could be losing tens of thousands from their pension over their working life.

This paper outlines, and seeks feedback on, a package of potential measures to:

  • protect consumers who do not or cannot engage with their investment decision
  • reduce charge complexity
  • promote charge transparency
  • consider ways in which charges can be opened up to external scrutiny 

Who this applies to

This paper raises questions for firms who operate, and consumers who participate in:

  • personal pensions
  • stakeholder personal pensions
  • self-invested personal pensions

It may also be of interest to other participants in the pensions value chain including:

  • providers of advice and guidance
  • investment platforms
  • asset managers
  • discretionary fund managers

Background to our work on non-workplace pensions

Many people in the UK use private, non-workplace pensions (NWP) to save for their retirement. Ensuring this market works well is an important part of our joint strategy with The Pensions Regulator (TPR). Two key parts of this strategy are to ensure that consumers can make informed decisions and that the pension products they use deliver value for money. Competition between pension providers can be an important driver of value for consumers. 

In 2018 we published a Discussion Paper (DP) 18/1 on effective competition in non-workplace pensions. DP18/1 marked the start of our exploration of:  ​​​​

  • whether the NWP market has the same weaknesses the OFT identified in the DC workplace pension market in 2013: demand-side weaknesses and reduced competition on charges
  • the differences and similarities between these two markets

Next steps

We invite stakeholders’ views and welcome alternative suggestions for the way we and the industry can address the issues identified. We have set out questions on each remedy so you can provide targeted answers and help us further develop our proposals. Please send your responses to [email protected] by Tuesday 8 October 2019. Please provide reasons and evidence in support of your views.

We aim to issue a consultation paper (CP) on our simplification and disclosure remedies in Q1 of 2020, including a Cost Benefit Analysis for any changes to rules or guidance. We will issue papers on Independent Governance Committee effectiveness and on a proposed value for money framework for pensions (developed with TPR) around the same time.

After considering the responses to these papers, we will consider if further steps on charges are needed and issue a consultation if we decide we need to make rule changes.