On 13 March 2024, the Chief Executive of the Financial Conduct Authority (FCA), Nikhil Rathi, delivered a speech on the future of pensions at the JP Morgan Pensions and Savings Symposium.

Key points

Mr Rathi acknowledged that pensions auto-enrolment processes have been a success, but emphasised the importance of addressing the gaps and inadequacies that remain in those processes. He acknowledged the role that generational factors play in relation to pensions; for example, one in five single pensioners have no income beyond the state pension and benefits to rely on, while many retiring in a decade or two did not have access to workplace pensions early in their career and were shut out of defined benefit pensions, and many younger people feel too stretched financially to prioritise retirement savings.  There is also a gender gap, whereby women are left 35% poorer when it comes to their private pension pots, as well as an ethnicity-based gap with adults from BAME backgrounds having lower private pension provision that white adults.

The speech highlighted the need to scrutinize whether current products make the most of what savings are already accumulating and whether the pensions system supports the risk appetite savers and the economy need. To address this, Mr Rathi referenced the newly announced proposed structural reforms by the Government, with a consolidation agenda for schemes not delivering value.

Furthermore, the speech touched on the newly introduced pensions dashboards, which aim to make it easier for consumers to track down disparate savings pots, seek advice and make informed decisions to plan for retirement. Mr Rathi highlighted the FCA’s expectation on firms to work towards securing better outcomes for consumers – especially considering the heightened risk of scams which accompanies the introduction of the pensions dashboards. He also pointed to the FCA’s continued commitment to intervening where it observes poor practice in firms, for example pockets of poor practice in Self Invested Personal Pension markets. He emphasised how this commitment aligns with the Consumer Duty and the FCA’s primary objectives of protecting consumers and market integrity, through focusing on preventing scams and fraud.

Mr Rathi concluded the speech by highlighting that consumers, firms, regulators and industry can act today to improve outcomes without waiting for a ‘perfect future solution’, including by saving more, receiving, seeking and imparting better support and advice, considering risk and gauging whether pensions products really provide value and are invested in the right areas.