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.
Annexes to the feedback statement:
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
We aim to issue a consultation paper (CP) in Q2 or Q3 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) in Q2.