2018年-FCA英国金融行为监管局_ms16_1_3_annex_4_19页_649kb

Summary of MS16/1.3: Annex 4 - Data Collection and Analysis

Core Content

This annex provides a detailed overview of the data and methodologies used in the Retirement Outcomes Review (ROR), focusing on the analysis of consumer investment choices and drawdown charges. The data collection was essential to understanding how consumers manage their retirement savings and the associated costs and investment strategies.

Main Datasets

1. FCA Half-Yearly Retirement Income Market Data (RIMD)

• Purpose: To monitor and assess the impact of pension reforms.
• Timeframe: 1st October 2015 – 30th September 2017.
• Scope: Data from 54 provider groups, representing 94 providers and 95% of pension assets in the UK.
• Key Features:
  • Includes data on annuity sales and drawdowns.
  • Split by consumer type (taking and not taking advice; new/existing consumers).
  • Used to sample providers and cross-check data.

2. Drawdown Information Request

• Target: 8 flexi-access drawdown providers.
• Response: 8 responses received, with one provider excluded due to limited data on unadvised consumers.
• Data Requested:
  • Consumer and product characteristics (e.g., age, pot size, employment status, whether they took advice).
  • Investment data (e.g., fund selection, investment changes, cash-like holdings).
  • Charge data (e.g., types of charges, frequency, and amounts).
• Sample Criteria:
  • Fully crystallised pot size (excluded phased or drip-feed drawdown).
  • Initial pot size of £10,000 or more.
  • Consumers aged 55 or older.

Morningstar Data

• Purpose: To provide performance data on consumer investments.
• Data Collected:
  • Returns, volatility, and Sharpe ratio for the last 1, 3, and 5 years.
  • Asset composition and fund ratings.
• Limitations:
  • 3 and 5-year performance data were not available for all funds.
  • Some funds were excluded due to lack of historical data.

Key Findings from the Data

• Total Drawdown Plans: Over 89,000 individual plans.
• Advice Utilization:
  • 60% of consumers took advice when moving into drawdown.
  • 63% of consumers opted to stay with their current provider.
• Pot Size:
  • Average initial pot size: £87,000.
  • Advised consumers had an average pot size of £105,000.
  • Unadvised consumers had an average pot size of £60,000.
• Withdrawal Activity:
  • 63% of both advised and unadvised consumers made withdrawals.
  • Two-thirds of unadvised consumers made ad-hoc withdrawals.
  • 80% of regular withdrawal consumers took monthly income.
• Investment Diversification:
  • 72% of unadvised consumers held their pension pot in no more than one fund.
  • Only 22% of unadvised consumers had investments in more than two funds.

Methodology for Investment Analysis

• Consumer Categorisation:
  • Consumers were grouped into those with all assets in cash, all in cash-like investments, and mixed holdings.
  • Mixed holdings were not included in the analysis due to limited numbers.
• Estimation of Harm from Being in Cash:
  • Assumed a 20-year period and full pot exhaustion.
  • Compared income from a cash-only portfolio to a diversified portfolio.
  • Found that a diversified portfolio could provide 37% higher income over 20 years.
• Investment Suitability:
  • Used the European Fund Classification (EFC) to categorise funds.
  • Added cash funds (≥90% cash) and money-market funds (majority in cash or short-term securities) as separate categories.
• Challenges in Analysis:
  • Limited to top 10 investments per consumer, potentially missing smaller holdings.
  • Snapshot data, so changes in investment after drawdown entry were not tracked.
  • Some funds lacked historical performance data, necessitating exclusion.
  • ISIN matching issues required assumptions to resolve duplicates.

Methodology for Drawdown Charges Analysis

• Charges Calculation:
  • Total charges = Fund Charges (based on OCF of top 10 investments) + Administration Charges.
• Limitations:
  • No monthly breakdown of administration charges.
  • No data on changes in investments during drawdown.
• Consumer Group Comparisons:
  • Additional analysis was conducted to compare charges between:
    • Advised vs. unadvised consumers.
    • New vs. existing consumers.
    • Different pot sizes.

Impact of Cash Defaults

• Analysis:
  • Compared the proportion of consumers in cash before and after the removal of cash defaults.
  • Found that:
    • Providers that removed defaults saw an 11% decrease in the proportion of consumers in cash.
    • Providers that did not remove defaults saw a 2% increase.
• Conclusion:
  • The removal of cash defaults had a significant impact on the proportion of consumers in cash.
  • Suggests that defaulting into cash may have influenced consumer behavior.

Challenges and Caveats

• Data Management:
  • Limited to top 10 investments to maintain data integrity.
  • Snapshot data means changes in investment strategy over time are not captured.
• Fund Classification:
  • Relied on Morningstar factsheets for manual categorisation.
  • Some funds were not traceable, requiring alternative data sources.
• Confidentiality:
  • Analysis was conducted at an aggregate level to protect provider confidentiality.
  • Limited granularity in results due to this constraint.

Summary

The Retirement Outcomes Review relied on a combination of FCA RIMD, drawdown information requests, and Morningstar investment data to assess consumer investment choices and drawdown charges. The analysis highlighted the importance of advice, pot size, and investment diversification in shaping consumer behavior. It also demonstrated that the removal of cash defaults significantly reduced the proportion of consumers holding their pots in cash. However, the analysis faced several challenges, including data limitations, snapshot nature, and the need to protect provider confidentiality.