Yahoo Finance Regulators join forces to stop millions from retiring with empty savings pot
Regulators are to review the pension process next year amid concerns that millions of people will reach retirement age with an empty pot of savings.
The Financial Conduct Authority (FCA) and The Pensions Regulator have unveiled a joint strategy to help workers save for old age as "gold-plated" final salary or defined benefit pensions start to disappear and the younger generations face a less generous package.
"The shift away from defined benefit pension schemes, low levels of savings, low interest rates and increased longevity all create long-term challenges," the two organisations said. "In the shorter term, problems such as scams and poor pension transfer advice put people’s savings at risk."
The regulators plan to review the pensions process next year and then set and enforce standards amid "concerns that many of the UK’s future pensioners will have to live on lower incomes than they expect and for longer".
It flagged this as a potentially "significant problem, with implications for millions of people".
The review will weigh up peoples' "understanding, engagement and trust in pensions" and will check they have enough information to make well-informed decisions. The two sides will also beef up their focus on scammers who try to target vulnerable retirees for cash.
Changes to the pension landscape in recent years have made people more responsible for their retirement pots, with those aged over 55 able to access all of their savings in one go. Final salary schemes, which pay out a proportion of an employee’s final salary for life, were the norm until the Eighties but have since become unaffordable.
Christopher Woolard, the FCA's executive director of strategy, said the regulators cannot implement change alone and need the support of the government, industry and consumers to create a better landscape for retirees.
