The U.K.'s Financial Conduct Authority is seeking industry input on decumulation strategies to help defined contribution plan participants benefit from drawdowns, after finding that they could receive 37% more income in retirement annually by keeping their savings invested instead of taking a lump sum.
The U.K. watchdog's consultation follows a retirement outcome review, which established that plan participants have a hard time comparing different post-retirement drawdown options as product fees vary from 0.4% to 1.6% among providers, and as a result they choose to receive cash.
The FCA is also looking for views on its proposal to engage savers early to help them end up with a more appropriate decumulation investment solution.
"We know that the choices introduced by the pension freedoms (regulation in 2015) have been popular with many consumers. However, they're now required to make more complicated decisions than ever before. Many people need more support when making choices," said Christopher Woolard, the FCA's executive director of strategy and competition, in a news release Thursday.
"The measures we have (proposed) today will help them think about that earlier, create investment pathways to help them with their choices and make costs and charges easier to understand," Mr. Woolard added.