The Pensions and Lifetime Savings Association (PLSA) has today (Monday) published its response to the Financial Conduct Authority’s (FCA) Retirement Outcome Review (RoR).
In its proposal, the FCA is proposing that firms offer ready-made investment pathways to an estimated 100,000 savers annually that enter into drawdown without taking advice. The FCA is also proposing that consumers’ pension investments are not defaulted into cash savings unless the customer actively choses this option.
Previously, the PLSA has said it supports the FCA’s plan to introduce investment pathways as the right solution to protect savers going into drawdown without taking financial advice.
However, the PLSA also stated that it believed that the customer journey through the pathways should enable savers to take a mixture of the options available. For instance, retirees may want to take some of their pot as cash and some as income.
George Currie, Policy Lead: Lifetime Savings, PLSA, said:
“Since the adoption of the Pension Freedoms, savers have been faced with very complex decisions at retirement. We welcome the FCA’s proposals as a step towards helping non-advised customers make better choices when they take out a drawdown product. In particular, the proposals help avoid the risk of people leaving their pension pot in cash when it would make more sense for it to be invested. We also welcome the emphasis placed on trying to ensure that savers have the right framework to support them in their decisions.
“In our Hitting the Target report, published last summer, we argued that non-engaged savers should benefit from choice architecture that helps them understand their objectives and, with the help of fiduciaries and providers, find solutions that align with Government-mandated principles. We envisage that these solutions would be a blend of cash, flexible income from investments, and guaranteed income.”
Lawrence Vousden, Head of Government Affairs and Media
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Steven Kennedy, PR Manager
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Sabrina Francis, PR & Social Media Officer
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