FCA has published the interim report on its retirement outcomes review, in which it looks at how the retirement income market has evolved since introduction of the pension freedoms.
FCA’s findings to date have included evidence that consumers welcome the new freedoms – for example, it is now the norm to access pots early, with over half of pots accessed being fully withdrawn. Almost all customers who fully withdrew their defined contribution savings had sources of income additional to the state pension.
FCA is however concerned about a few issues. It found customers sometimes do not trust pensions, which is why they withdraw, and that they do not shop around and tend to draw down without taking advice. It also found that annuity providers are leaving the open annuity market and that product innovation has been limited.
As a result, FCA is considering some remedies to ensure appropriate consumer protection and encouragement for innovation. It seeks views on its thoughts by 15 September and plans to publish its final report in the first half of 2018.