There has been mixed industry response to the latest FCA consolation, which proposes radical changes to the pension transfer system and ways to modernise future pension projections.
While there was support for the broader objectives, many industry bodies called for better regulatory alignment, with these reforms also being implemented across the TPR-regulated trust-based market at the same time. A number of responses to the consultation said this would be necessary to speed up transfers times, and ensure savers have the information they need to make informed decisions about consolidation.
In its response to the consultation paper (CP25/39) Pensions UK called for unified regulatory action. It said the proposals risk falling short on objectives unless regulators take a coordinated, whole market approach.
It says it wants the Department for Work and Pensions (DWP) and The Pensions Regulator (TPR) to develop parallel proposals to ensure consistency, reduce market complexity, and deliver equitable protections for all savers.
The FCA is proposing a new transfer system, which will require ceding firms to acknowledge transfer requests within two days and then supply key details to the new provider within a 10 day timeframe. The new provider then has three days to present comparisons back to savers.
This call for regulatory alignment was echoed by the The Investing and Saving Alliance (TISA) and People’s Partnership, one of the biggest AE master trust providers.
Pensions UK is also calling on the FCA to introduce an explicit ban on cash and other transfer incentives, citing behavioural insights research that demonstrates strong consumer bias toward upfront rewards, even where transfers could reduce long term pension value.
The response warns that relying solely on Consumer Duty will not sufficiently protect savers, and that stronger enforcement is needed if this approach is pursued.
Pensions UK adds that as drafted, the proposals risk creating “disjointed and confusing customer experiences”, particularly where comparison tools prompt transfer decisions before scam prevention checks or stronger nudge requirements are triggered.
It said clearer sequencing and regulatory alignment are essential to avoid consumer frustration or disengagement. This includes co-ordination with broader industry reforms, particularly the new Value for Money (VfM) Framework, small pots consolidation and pensions dashboards.
It says: “Without alignment, providers risk duplicated effort, inconsistent messaging and increased costs that could have unintended consequences for the push to consolidate small pots. Continuous user testing remains essential to ensure comparisons remain intuitive and genuinely informative.”
Other providers went further and called for the FCA to defer proposals until 2030. Aegon said that this was not the right time to introduce these changes, given the roll-out of wider consolidation initiatives.
It its response it said the FCA should encourage use of existing “trace and consolidate” tools as part of Consumer Duty. It also highlighted the “bizarre” decision to propose to implement this for contract-based but not trust-based pensions.
Aegon pensions director Steven Cameron says: “The FCA is proposing a major change to the process around consolidating defined contribution contract-based pensions. We support the policy intent of ensuring members are protected from losing out, but with so many other major changes underway across the pensions market, now is just not the right time for the proposed changes.
Pensions consolidation can be good for individuals – making it easier for people to manage their pension, supporting better engagement, simplifying investment and ‘at retirement’ decisions, and often leading to lower charges.
“But the proposals could inadvertently discourage some from consolidating just when the Government is pushing for widespread scheme and small pot consolidation, partly to benefit the UK economy.
“With the industry already facing an unprecedented volume of pension changes, we’re calling on the FCA to put these proposals on hold until 2030.
“By then, the Pension Schemes Bill will have led to significant scheme-level consolidation across the workplace DC market, into mega funds, with the Value for Money Framework ensuring remaining schemes offer good value. Pension dashboards will also be live, providing easy access to much of the information involved in the comparisons proposed here.”
Future projections
There was also concerns about how new projections might be used, particularly if there is not regulatory alignment between the FCA and TPR.
The Society of Pension Professionals said it agreed with the scope of the proposed new regime, which looks at how future projections might be calculated and used in digital modelling tools.
The SPP said stochastic models should be encouraged to project futures returns, and it agreed with the FCA that firms should have flexibility in how they communicate the outputs of pension modellers and digital tools.
However, the SPP urged the FCA to introduce guidance or caps on future growth assumptions, meaning that these projections would either have to be grounded in expected market returns, or that firms would have to disclose how their projects compare to market benchmarks.
It added that projection figures providers to savers under these models must be “useful and comparable” to allow savers to make well-informed choices.
The SPP also expressed concern at what they say is an overly ambitious timeline for implementing the FCA’s proposed changes in relation to simulations in digital tools, recommending that this be extended from 12 months to 24, to allow for consumer testing of tools to ensure a positive user experience.
Quilter head of retirement policy Jon Greer adds: “We welcome the FCA’s ambition to modernise pension projections and bring them in line with what consumers expect in a digital age.
“Moving towards more interactive, outcomes‑focused disclosures is a really positive step that should help people better understand risk, returns and what their retirement savings might actually mean for them.”
But he added that this issue needs to be looked at alongside the transfer comparison information savers would get under these wider proposals. He said that currently there are a number of initiatives underway, some of which are still bedding in.
“We’d urge the FCA to carefully consider the timing of any new requirements, so it doesn’t unintentionally add friction or slow down transfers for customers.
“If the proposals do go ahead, it will be vital to ensure consistency across trust‑based and contract‑based schemes to avoid regulatory gaps. And to make the whole regime workable at scale, the development of standardised data and APIs will be essential. Without a digital solution, firms simply won’t be able to deliver this efficiently or at the volume required.”
Finally, TISA added that it was important there was consistency between providers, dashboards and online models when it came to future growth assumptions and retirement projections.
Renny Biggins, head of policy: products & long-term savings at Tisa, says: “While we support the aim of these proposals to improve consumer outcomes, any change that risks adding material delay to transfers must be backed by robust consumer testing to ensure any benefits derived are proportionate to the significant time and operational burden involved.
