Many industry pensions experts have given a cautious welcome to the FCA Retirement Outcomes Review but some have voiced concerns about aspects of the proposed changes, especially how investment pathways will work.

ABI director general Huw Evans said: “This is a considered report from the FCA. It rightly recognises that, since the pension flexibilities were introduced, the market has been evolving.

“Introducing a set of investment pathways for customers going into drawdown is a common sense approach which should strike the right balance between engaging them in decision-making while taking away some of the complexity.”

However, Jessica List, pension technical manager, Curtis Banks said: “It’s less than a week since the Government stated that it didn’t see the benefit of pursuing the idea of default investment pathways, deeming them incompatible with the idea of the Pension Freedoms and acknowledging that it would be difficult to build defaults suitable for the widely varying objectives of consumers.

“It seems strange, then, that the FCA seems to have come to almost the opposite conclusion.”

PIMFA senior policy adviser Simon Harrington said the report struck the “right balance” but added: “The introduction of multiple investment pathways, hopefully overseen by strong, independent governance in a restricted choice architecture framework, is a particularly welcome recommendation which should encourage consumers to fully understand their retirement options without fear of making the wrong decision.

“However, we want to be clear that whilst investment pathways are a welcome addition to the landscape to support non-advised clients, we remain of the view - supported by the report's findings - that individual outcomes will be better on an advised basis.”

Financial Planning and retirement advice specialist LEBC said it supported the drive to help consumers with retirement decisions. Kay Ingram, director of Public Policy, added: “We would like to see more emphasis on the public being made aware of the value of independent regulated advice.”

Steven Cameron, pensions director at Aegon said the government was right to introduce the Pension Freedoms but now was the right time to review them to see if further “remedies” were required.

Tom McPhail, head of policy at Hargreaves Lansdown, said: “The pension freedoms are popular and working well but investors often need help and guidance in managing their retirement savings, these proposals will help address these needs.”

 “We also note the following statement in the FCA’s document “In general, SIPP customers appear to be more engaged with their investment decision. 77% of them said they know exactly where their money was invested, compared to 29% of life insurance firm (ie non-SIPP) customers”.

“Many investors are happy making their own choices over what to do with their pension pot. It is only fair they are given a statement of costs which allows them to compare one option against another..”

Tom Selby, senior analyst at AJ Bell, said: “Given the level of pressure exerted on the FCA from various quarters, it felt inevitable some form of intervention would be proposed with the aim of protecting non-advised drawdown savers.

“We are pleased the FCA hasn’t jumped in with both feet in this regard and will instead consult on the idea of introducing default investment pathways.”

Ian Browne, pensions expert at Old Mutual Wealth, said: “We should not settle for the bare minimum for non-advised customers. Every customer deserves the chance for prosperity in retirement and the FCA’s findings are clear in showing there is huge value in advice.”

Rachel Vahey, product technical manager at Nucleus, said: “It is important that any requirement to offer default investment pathways is appropriately set and should only be offered to the non-advised entering drawdown. Those who receive regulated advice already receive this help setting an investment strategy.”


Andrew Tully, pensions technical director, Retirement Advantage said: “‘I’m not a fan of default retirement pathways, but it is startling to note FCA’s findings that over one-third of non-advised drawdown customers are wholly holding cash.”

Andrew Pennie, head of pathways, Intelligent Pensions, said: “If we are to move to a range of drawdown investment pathways we must ensure users are aware of the limitations and risks of these options and that with advice and a tailored solution, they would be far more likely to achieve a better retirement outcome.”