Long ReadJan 5 2023

What does 2023 hold for pensions?

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What does 2023 hold for pensions?
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  • It was confirmed that retirement income advice will be a focus for the FCA over the next two years as it seeks to explore how companies are delivering this and whether consumers are getting suitable advice. It plans to communicate further information on the specific work planned in the forthcoming weeks. Suffice to say now might be a very good time for advisers to review their centralised retirement plan and drawdown processes.
  • It also re-emphasised that clients should receive value for money where an ongoing service is in place. It is difficult not to join this up with the previous bullet point and conclude that ongoing advice in drawdown could especially be a focus. 

Regulatory focus

This year sees the introduction of most of the consumer duty rules and guidance, which will be one of the key areas of focus for the FCA in 2023 and beyond.

From a pensions perspective, and as identified earlier, drawdown advice is likely to be front and centre of this.

Advisers will need to consider all the risks in drawdown, and how foreseeable harm is being mitigated as much as possible.

Advisers may very well already have a very robust process in place, but they will also need to consider how this is evidenced in their annual report, and the collection of appropriate management information is key to this. 

Further changes to the pension rules?

It is hardly a secret to say that government finances are under extreme pressure.

Given this situation it is not impossible to think that it might decide at some point to reallocate some of the costs of pensions to other areas.

What form could this take? Well, if it were to happen it could be further restrictions to the annual allowance, the lifetime allowance, pension commencement lump sums or something else.

The only surety we can give clients is that at present many of the rules around pensions are still relatively generous, and it makes good sense to use them for clients’ benefit where possible. Pensions are still one of the – if not the – best investments that can be made.

Looking ahead

Last year was the year in which we have been able to regain a semblance of normality following years of Covid disruption.

This has meant being able to catch up in-person with people we may not have seen for a couple of years – whether that be client meetings or attending conferences and events. In many ways I feel it has re-energised us.