Pensions market remains far from transparent, FCA says

Nike Trost said it was for this reason that the FCA would continue to focus on pensions’ value for money.

Concerns about value for money and competition in this market go back some time and are still very important, Trost said at The Investing and Saving Alliance’s Annual Retirement Conference 2022 on March 9.

“Notwithstanding that we have implemented a number of measures to improve governance and improve other outcomes, it is noticeable that transparency is still a lot less than in other financial services markets,” she said.

She argued that this means end investors, or those making decisions on behalf of end investors, did not necessarily have the information available to compare different products.

Trost added that the watchdog was interested in what will generate long-term value for money in pensions.

“In the context of pensions, these are long-term assets and it is important that we get the timeframe right. There’s quite a lot of work for us still to do in that space,” she said.

The Pensions Regulator and the FCA published a discussion paper on value for money last September, which suggested ways of forcing defined contribution schemes to disclose more data around investment performance, scheme oversight, and costs and charges, with the aim being to create an “holistic framework” for assessing value for money in the sector.

Trost said the FCA hears “time and time again” that investment composition in pensions is not as carefully considered as it could be, and there is a focus on short-term liquidity needs that are quite hypothetical.

"We’ve heard from stakeholders that there aren’t that many options and it is hard to achieve a broader investment strategy or consider a broader range of assets,” she said.

This article originally appeared on FTAdviser.com