Quick update from the FCA on pensions;
The Financial Conduct Authority (FCA) has found that people holding legacy pension products, now closed to new savers, could be receiving poorer value than those in newer ones.
The regulator identified some good practices, but complex charging structures, older product design and weaknesses in firms’ data meant some pension savers are not getting as much value as they could.
What good looks like
Some unit-linked non-workplace pension providers are working to simplify or rationalise their legacy products and funds, or have plans to do so. There was evidence of firms capping or reducing charges for customers in legacy products. Some were also comparing outcomes across different customer groups and products, and moving customers to better-value alternatives.
The FCA is now calling on all pension providers to consider the report and take on the good practice identified. The regulator is also engaging with firms on barriers they face in improving the value for customers, particularly in closed books.
Charlotte Clark, director of cross-cutting policy and strategy at the FCA, said:
“Consumers in older products should not be left behind, and the good news is that some firms are already showing it doesn’t have to be this way. We want to see that progress reflected right across the market.”
This work supports wider reforms, including targeted support and pensions dashboards, to help consumers get the most from their pensions. It is also a priority under the FCA’s Pensions Regulatory Priorities and forms part of its broader work on modernising pensions and long-term savings.
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