Retirement outcomes review: interim report

Terms of reference
14/07/2016
Open consultation: Interim report
12/07/2017
12/07/2017
Interim report consultation closed
15/09/2017
Final report
Q2 2018

We have published the interim findings of our Retirement Outcomes Review, which looks at how the retirement income market is evolving since the pension freedoms were introduced in April 2015. The review has particularly focused on consumers who do not take advice.

This summary provides a brief overview of the key points from the interim report and may be enough detail for some readers:

Retirement Outcomes Review: at a glance (PDF)

For a more in-depth description of our findings and proposed remedies you can read the full interim report:

Retirement Outcomes Review: interim report (PDF)

We announced our intention to undertake this review in our 2015/16 Business Plan and published the Terms of Reference in July 2016.

Our findings

We found that consumers have welcomed the pension freedoms. Over one million defined contribution pension pots have been accessed since the reforms. The pension freedoms have changed the way consumers access their pots in the following ways:

  • accessing pots early has become 'the new norm'
  • over half (53%) of pots accessed have been fully withdrawn
  • most consumers (94%) who fully withdrew their defined contribution savings had other sources of income in addition to the state pension
  • drawdown has become much more popular

Emerging issues

This market is still developing and firms and consumers are continuing to adjust to the reforms. However, we identified five emerging issues:

  • consumers who fully withdrew their pots did so partly because they do not trust pensions
  • most consumers choose the 'path of least resistance', accepting drawdown from their current pension provider without shopping around
  • many consumers buy drawdown without advice but may need further protection to manage their drawdown effectively
  • annuity providers are leaving the open annuity market
  • product innovation has been limited

Potential remedies we are considering

To support pension freedoms and get this market on a good footing for the future, it is important that:

  • there are appropriate protections for those least able to engage
  • the market drives value and innovation
  • consumers can get the right support when they take important and difficult decisions about their pension savings

We have identified some potential remedies to help tackle all three areas, and would like views on both how urgent and appropriate they are:

  • additional protections for consumers who buy drawdown without advice
  • measures to promote competition for consumers who buy drawdown without taking advice, including proposals to:
    • allow consumers to take some of their savings early without having to put the rest into a drawdown product
    • make it easier for consumers to compare and shop around for drawdown products
  • tools and services to help consumers make good choices

Next steps

Getting this right will require cooperation across the government, regulators, industry and consumer bodies.

We invite stakeholders to send their views on our findings and proposed remedies to [email protected] by 15 September 2017. We will also hold events to get stakeholders’ views in Autumn 2017. We will think further on whether we should intervene at this stage and how we can do this most effectively. We intend to publish our final report in the first half of 2018.