The pensions industry is largely supportive of the targeted support proposals in a Financial Conduct Authority consultation closing on Friday but is divided about the exclusion of annuities and pension consolidation from recommended solutions.  

The APPT is supportive of the policy intent behind targeted support and agrees that annuities should be excluded from the list of possible recommendations but says providers will need to be able to suggest “considering annuities without signposting a particular product or provider”.  

 

“We also agree with excluding the ability to suggest consolidation of pots into a particular product,” the APPT said. 

 

It added that care will be needed to ensure that guided retirement and other new policies fit “harmoniously” with the targeted support framework.

 

Vice chair Vassos Vassou also raised the issue of targeted support having to be delivered by an authorised entity, meaning it will likely need to be provided by a corporation.  

 

“For master trusts that could be done by trustees if they form a corporate entity but, given the scale of the task, they are likely to leave this to the scheme funder. For sole employer DC trusts, only the largest are likely to look at doing this,” he pointed out.   

 

Vassou said regulations should enable trustees to subcontract targeted support to another party, since not providing this would disadvantage their members compared with those in master trusts, for example. Where trustees decide to leave provision to the scheme funder or another subcontracted party, they will need to be clear to members who the targeted support is provided by, the APPT argues.  

 

It notes that “there are very limited references in the consultation to FCA working with [the Pensions Regulator]” and said the FCA will need to ensure a joined-up approach with TPR to avoid regulatory confusion inhibiting development of targeted support in trust-based schemes.  

 

The Society of Pension Professionals has found numerous areas where the proposals could be improved, outlined in its response. It is against the exclusion of both annuities and pot consolidation.  

 

Amanda Cooke, who chairs the society’s Financial Services Regulation Committee, said: “The SPP supports the concept of targeted support and is keen to ensure these proposals deliver for consumers. That’s why we’ve highlighted areas of concern, likely barriers to success and a range of suggested improvements. We look forward to continuing to work with the FCA in a spirit of collaboration to make targeted support the best it can be.”  

 

It said restrictions on targeted support could end up harming savers: “The current proposals will restrict the level of support that could be made available to consumers and could therefore be detrimental to consumers. For example, in relation to decumulation and annuities.”  

  

The SPP said it was unclear why pension pot consolidation was being excluded: “In both the accumulation and decumulation phases, consolidation may be an integral piece of any suggestion to achieve a better outcome. The proposals to exclude targeted support in relation to consolidation also appear to be inconsistent with wider policy objectives to promote consolidation and encourage members to seek better value for money.”

 

The Association of British Insurers, perhaps surprisingly, appears less concerned about the exclusion of annuities.   

George Ritchie, long-term savings policy manager at the Association of British Insurers, said targeted support could work well with guided retirement, preventing people from falling into an unsuitable default. Guided retirement default solutions could actually form part of targeted support’s ready-made suggestions – minus any solutions that offer longevity protection, such as annuities, according to the ABI. 

However, the ABI disagrees with current proposals to exclude not just annuities but annuity brokerages from ready-made suggestions. 

To ensure that targeted support becomes the mass-market intervention envisaged by the FCA, Ritchie said that “changes are needed to clearly outline how customer outcomes will be monitored, how firms should treat 'additional' customer information, and how firms should group customers”, details that are currently missing. 

 

The ABI also wants to see the Privacy and Electronic Communications Regulations updated, along with the Information Commissioner’s Office guidance on direct marketing. The ABI’s response can be read here. 

 

While targeted support should help provide something closer to advice than guidance can, the Pensions Administration Standards Association said a third option between advice and guidance will make this even more complex to navigate for pension schemes. 

 

“Schemes need clear boundaries and confidence [that] guidance won’t expose them to regulatory risk,” PASA said in its response.