The Financial Conduct Authority (FCA) has published a Discussion Paper to gather views on the market for non-workplace pensions. The FCA estimates that non-workplace pensions, also known as individual private pensions, collectively represent around £400bn assets under management.
This is more than double the amount invested in contract-based Defined Contribution (DC) workplace pension schemes. Research suggests that at least 1 in 4 adults have accumulated benefits in non-workplace pensions.
The FCA is seeking feedback to better understand the market for non-workplace pensions, including whether competition is working well and if there are issues that need to be addressed in order to protect consumers.
The FCA is looking to understand how the differences and similarities between the workplace and non-workplace markets impact competition and consumer outcomes. The particular areas of focus include:
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product complexity. Most pensions are complicated products and product performance may not become apparent for many years
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the factors which may reduce consumer motivation and ability to invest time and effort in decisions related to their pensions
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whether customers can identify and freely move to more competitive products
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fund choice and the use of defaults. The FCA is concerned that informal defaults may be operating in the market for non-workplace pensions that are not subject to the same protection as defaults in workplace pensions
The FCA is also looking at whether providers are competing on charges and if there are barriers to consumers identifying, and choosing, from more competitive products.
The FCA is seeking feedback by 27 April 2018. The FCA will consider responses and will then look to collect data to better understand any problems identified.
Press release
Discussion paper
© FCA - Financial Conduct Authority
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