As forecast in our blog post earlier in the year, the purpose of this Policy Statement is to help non-advised drawdown consumers, who struggle to make investment decisions.
The main findings were:
Providers have until 1 August 2020 to implement this.
The FCA has now confirmed that all non-advised customers must be presented with the choice of 4 drawdown options.
The four pathways are:
The offering of these pathways will help customers ensure that they are investing in assets and funds which best suit their retirement needs.
At drawdown, non-advised customers will now only be allowed to predominantly invest in cash if they make an active decision to do so. Pension firms need to make sure that customers have been told about the likely long-term impact on their incomes and get the customer to confirm that they understand the risks associated with this.
For advised and non-advised customers, pension providers will now need to make pension charges more transparent and predictions easier to compare. These annual costs and charges will also need to be disclosed clearly to the customers in pounds and pence.
Ensuring that costs and charges are presented clearly will hopefully help customers understand the long-term costs involved in their pensions and help prevent customers pension pots being dramatically reduced by high charges.
Overall there was nothing particularly surprising in this paper, and these changes will help ensure that customers and in particular non-advised customers are protected against making bad retirement decisions.