2017年-FCA英国金融行为监管局_retirement_outcomes_review_summary_14页_446kb

Retirement Outcomes Review Summary

Core Content

This report is an interim review of the retirement income market following the introduction of pension freedoms in April 2015. It focuses on how consumers, particularly those who do not seek financial advice, are responding to these changes. The review explores the impact of these reforms on market dynamics, consumer behavior, and the effectiveness of competition and product innovation.

Main Findings

• Pension freedoms have significantly changed access patterns: Over one million defined contribution (DC) pension pots have been accessed since the reforms. Early access has become common, with 72% of pots accessed by consumers under 65.
• Most pots are fully withdrawn: 53% of pots accessed have been fully withdrawn, with 90% of these pots being less than £30,000. Over half of these withdrawals were transferred into savings or investments.
• Drawdown is now more popular than annuities: Twice as many pots are moving into drawdown than annuities. Before the reforms, over 90% of pots were used to buy annuities.
• Limited trust in pensions: Many consumers fully withdraw their pots due to a lack of trust in the pension system, often influenced by negative media coverage and perception of stagnation.
• Consumers do not seek advice: 30% of drawdown plans are purchased without advice, up from 5% before the reforms. This highlights the need for further support and protection for these consumers.
• Most consumers do not spend their withdrawn savings: Only 25% of fully withdrawn pots are spent, with the majority being reinvested or saved.
• Providers have adapted to the new market: They have introduced simpler drawdown products and tools to help consumers understand their options, but have not focused on innovation yet.
• Annuity market is shrinking: Several large insurers have exited the open annuity market, reducing choice for consumers.
• Consumer behavior is driven by inertia and simplicity: Many consumers choose the path of least resistance, buying drawdown without comparing options.

Emerging Issues

1. Lack of trust in pensions leads to early full withdrawal, which may result in higher tax payments and missed investment opportunities.
2. Path of least resistance means many consumers do not shop around for better deals, potentially leading to poor value for money.
3. Need for further support and protection for consumers making drawdown decisions without advice.
4. Exit of providers from the open annuity market reduces competition and choice for consumers.
5. Limited innovation for mass market consumers, with few new products combining flexibility and guarantees.

Potential Remedies

The Financial Conduct Authority (FCA) is considering several remedies to improve the market:

• Extra protection for non-advised drawdown users: Introducing default investment pathways based on retirement outcomes and a charge cap to prevent excessive fees.
• Extending the role of Independent Governance Committees (IGCs) to scrutinize decumulation products for value for money.
• Allowing early access to savings without requiring a drawdown product: Separating the decision to take tax-free cash from the decision about the rest of the pot.
• Improving drawdown comparison tools: Introducing tools and summary cost metrics to help consumers compare options and make informed decisions.
• Enhancing consumer awareness and engagement: Improving existing communications and encouraging the use of free guidance and enhanced annuities.

Next Steps

• The FCA will continue to monitor the market and assess the potential harm from emerging issues.
• Stakeholders are invited to respond to the report by 15 September 2017.
• The FCA plans to publish a final report in the first half of 2018 and a broader pensions and retirement income strategy later in the year.
• Further work will be done to evaluate the effectiveness of proposed remedies and the need for intervention.

Conclusion

The pension freedoms have led to significant changes in how consumers access their retirement savings. While early access and drawdown are now the norm, the market still faces challenges in terms of competition, consumer trust, and innovation. The FCA is committed to ensuring that the market remains open and competitive, and is exploring ways to support consumers who make important decisions without financial advice.