The Association of British Insurers has hit back at findings in the FCA’s retirement outcomes review, challenging the City watchdog’s claim that accessing pension savings early is “the new norm”.
The Financial Conduct Authority's report stated almost three quarters of the pension pots that have been accessed belong to those under 65 years old, with the majority choosing to take lump sums in favour of a regular income.
The review goes on to say more than half of pots accessed have been fully withdrawn.
But according to the ABI, the regulator’s findings are inaccurate. Its own statistics show that although more than 100,000 pension pots are being accessed every quarter, 4,7m defined contribution pots belonging to the 55 and over age group remain untouched.
Huw Evans, director general of the ABI, said: “At the time the pension flexibilities were launched we said it would be important to monitor how they bedded in and what the long-term implications are for pension savings.
"This report is a welcome part of that analysis, although our own data does not support the view that accessing pension savings early has become 'the new norm'.”
The FCA report is also critical of the industry for failing to offer sufficient tools and services for people considering drawdown, and informing them or their options. The regulator believes not enough is being done to encourage competition among providers, and that savers lack trust in the pensions.
But the ABI maintained that pension providers responded to the reforms promptly and took steps to ensure savers were presented with options.
Mr Evans said: “Providers responded swiftly to the pension reforms, which did introduce considerably more choice for savers. The market and services are still evolving and the sector is committed to helping customers make informed decisions.
“Work already underway by the ABI and its members includes a project progressing ideas on how a flexible income drawdown comparison tool would work, alongside efforts to increase consumer engagement with pensions and create a ground-breaking pensions dashboard service.”
Mr Evans added: “The report makes clear the importance of access to high quality advice and guidance, reinforcing how critical it is that the Government and FCA focus on delivering the objectives of the Financial Advice Market Review, and more.”
dan.moore@ft.com
