We are introducing rules and guidance aimed at improving consumer engagement with their retirement income decisions, and promoting competition by making the cost of drawdown products clearer and comparisons easier.
The new rules and guidance cover:
- information which is sent to consumers before they decide how to access their pension savings, including ‘wake-up’ packs, ‘wake-up’ pack reminders, and additional retirement risk warnings
- information provided to consumers about annuities and eligibility for enhanced annuities
- changes to make the cost of drawdown products clearer and more comparable
We are also consulting on further changes, including the introduction of investment pathways, ensuring investment in cash is an active choice and actual charges disclosures. These are covered separately in Consultation Paper 19/5.
The introduction of the Government’s pension freedoms in 2015 provided more flexibility in how and when consumers can access their pension savings. Consumers using the freedoms are making potentially more complicated choices about their retirement.
In June 2016, we launched ROR. We wanted to assess how the retirement income market was evolving following the introduction of the pension freedoms, to address any emerging issues that might cause consumer harm and put the market on a good footing for the future.
In June 2018, we issued the ROR Final Report and published a Consultation Paper (CP18/17 - Retirement Outcomes Review: Proposed changes to our rules and guidance) setting out our proposed remedies in response to our review’s findings. The Consultation Paper set out changes to protect consumers from poor outcomes, improve consumer engagement with retirement income decisions and promote competition. This Policy Statement (PS) sets out our response to the feedback we received to CP18/17. It also sets out, in the Appendix, the final Handbook changes we are making following this consultation process.
Who this applies to
This PS will primarily be of interest to firms providing pensions, annuities and income drawdown.
This PS will also be relevant to stakeholders with an interest in pension 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
What you need to do
Firms should note the Handbook changes in the PS and adapt their practices accordingly.
The changes to ‘wake-up’ packs, retirement risk warnings and reminders changes, and the annuity information prompt will come into force on 1 November 2019. Changes to make the cost of drawdown products clearer and comparisons easier will come into force on 6 April 2020.