Marvin OnumonuThe Investing and Saving Alliance (TISA) urged the Financial Conduct Authority (FCA) to work with the Department for Work and Pensions (DWP) to make sure proposed pension transfer changes are consistent and tested with consumers before final rules are set.
TISA called for the same assumptions to be used so people see a clear and consistent message across pension dashboards, annual statements and online tools.
Renny Biggins, head of policy: products and long-term savings at TISA, said: “While we support the aim of these proposals to improve consumer outcomes, any change that risks adding material delay to transfers must be backed by robust consumer testing to ensure any benefits derived are proportionate to the significant time and operational burden involved.
“Changes must also be mirrored by DWP and implemented across the board simultaneously to avoid members receiving inconsistent outcomes and disjointed journeys between regulatory regimes.
“This is a prime example of the issues that exist having two regulatory regimes spanning across DC workplace pensions.”
TISA’s main recommendations to the FCA were to consumer-test the transfer changes and show that the proposed two-week delay for consumers would be justified.
TISA also said the transfer proposals should be matched in DC occupational pension rules and brought in at the same time so customers do not have inconsistent experiences.
The organisation also called for simulation scenarios and growth rates to be based on standard SMPI assumptions to avoid confusion.
Biggins added: “We also have concerns that the proposals for online modelling simulations go beyond their intended purpose by providing a personalised decumulation solution which could be perceived as a personal recommendation by those close to retirement and discourage consumers from using them to scenario plan.
“More generally, we already have assumption requirements for SMPI which members receive annually and will also be used for pension dashboard when providing an estimated retirement income.
“We strongly recommend the assumptions for both decumulation and growth are aligned to these requirements so members are not receiving wildly different figures, which would only serve to confuse, create disengagement and add to distrust in the framework.”
