The U.K. Financial Conduct Authority and the U.K. Pensions Regulator will work together to ensure retirement plans are optimizing income at the right level of risk in order to generate good outcomes for participants, delegates heard at the Pension and Lifetime Savings Association's annual conference Thursday.
Following an announcement Thursday, the two regulators set priorities for a collaboration that will help set standards in the U.K. defined contribution market and work to design a regulatory framework. This will cover how participants move toward retirement, as well as wording about and content of retirement options, David Geale, director of policy at the FCA, said during a panel discussion.
Lesley Titcomb, CEO of TPR, speaking on the same panel, said the regulators will be looking to collaborate on supervisory techniques that will help them to get more traction when needed.
Mr. Geale added: "We want to see competition on the basis (of savings vehicles) that people can understand."
The agencies are working toward these changes so people understand what they are paying for, he said. "But if people are prepared to pay more — that's not a bad thing," he said.
According to Mr. Geale, the charge cap that was set by the U.K. government on investment and administration costs was a consequence of people not engaging.
The regulators teamed up after recognizing people might not have adequate income in retirement compared to what they expect. They identified areas of risk — including that savers struggle to maximize their retirement savings and that money is not being managed in line with savers' needs — on which they will focus. The regulators also want to ensure that errors by administrators, such as money lost during transfers or poor value for money, are eliminated.
The FCA and TPR will undertake initiatives to communicate with employers about their auto-enrollment duties, and the FCA will research levels of undersaving for retirement.
