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FCA details plans to boost non-workplace pension customers

The proposal’s aim is to ensure pension savers have as big a pension pot as possible when they come to retire.

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Employers are being encouraged to offer a new ‘default’ investment option to help non-workplace pension customers save for their future and retirement.

 

Under new proposals, the Financial Conduct Authority (FCA) is urging firms to consider such support, as non-working pension customers currently have to choose their own investments from a wide range of options.

 

This difficulty can make it harder for some customers who do not take advice to choose investments that meet their retirement needs.

 

According to the FCA, a default option would need to be an appropriately diversified basket of investments and take account of climate change and other ESG risks.

 

Non-workplace pension providers would also warn customers holding high levels of cash and prompt them to consider investing in other assets with the potential for growth.

 

The proposal’s aim is to ensure pension savers have as big a pension pot as possible when they come to retire.

 

“People spend decades working hard to build up a pension to support them in retirement, and we want their savings to work just as hard for them,” explained Sarah Pritchard, the FCA’s executive director for markets.

 

“These proposals will ensure that customers who don’t take financial advice can benefit from a professionally designed investment strategy, and reduce the risk of their retirement income being eroded by inflation.

 

“The proposals form part our wider work on pensions which is designed to ensure that customers are better supported throughout their pension journey.”

 

Read the latest issue of the Reward Strategy magazine here for up-to-date details on pension trends and news.

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