The Financial Conduct Authority will begin collecting data on retirement incomes in a more systematic way, it has announced.
More than two years after the introduction of pension freedoms, the FCA has said it needs to move away from collecting data on an “ad hoc” basis.
It has now introduced two new regulatory returns for retirement income product providers - life companies, fund managers and any other firm which creates and sells retirement income products - so it can collect data from the whole of the market.
The FCA said: “The new regulatory returns will give us a better picture of the market, as our analysis will not rely on data from only a sample of firms.
“They will also provide firms with greater clarity on what data they need to provide and certainty regarding when and how often the data is required.”
The first regulatory return will ask for flow data on a six month basis to monitor how pension freedoms are changing firm and consumer behaviour and the risks relating to sales of different products.
It will include asking for information such as the number of defined benefit to defined contribution transfers completed, the total number of plan holders who have fully encashed their pension through a small pot lump sum, uncrystallised funds pension lump sum or drawdown.
The second return will collect retirement income stock data and withdrawals flow data annually to identify trends in the market.
This includes asking for data on uncrystallised stock, partly crystallised stock and crystallised stock as well as payments from annuities.
The information will be collected through Gabriel and the requirement will come into effect in September.
Nathan Long, senior pension analyst at Hargreaves Lansdown, said: "Understanding the choices people are making when accessing their pension is absolutely critical in ensuring the pension freedoms are as successful as they are popular.
"These rules could help, but data must not dominate and regulators should still take time to speak to people. Retirement is very personal and everyone has their own unique set of work, family, financial and health circumstances which drive the decisions they make. The numbers only tell a small part of the story."
Two years after then chancellor George Osborne delivered pension freedom and choice, the Financial Conduct Authority is considering a return to default retirement income strategies.
In the interim report from its Retirement Outcomes Review, published last week, the FCA revealed it is particularly looking at additional protections for consumers who buy drawdown without advice.
Drawdown has become much more popular: twice as many pots are moving into drawdown than annuities, it found.
The FCA is looking at allowing consumers to take some of their savings early without having to put the rest into a drawdown product.
It has proposed producing tools and services to help consumers make good choices, primarily by building on existing initiatives such as the free guidance provided by Pension Wise.
The FCA said: “Getting this right will require cooperation across the government, regulators, industry and consumer bodies as the measures we are proposing do not fall within the FCA’s remit alone and some of these issues sit outside our immediate powers.”
In respect of providers withdrawing from the open annuity market and innovation, the FCA has not proposed action at this time.
But the regulator said it would keep the annuity market under review.
damian.fantato@ft.com
