With trust-based schemes explicitly in scope, the FCA’s proposals on “targeted support” for non-advised savers could offer pension scheme trustees a fresh opportunity to support disengaged members, reports Sara Benwell.
Defined contribution (DC) savers who fall outside the scope of traditional advice or guidance could soon benefit from new forms of support, under proposals published by the Financial Conduct Authority (FCA).
The regulator’s consultation on what it calls “targeted support” sets out a new regime that would allow authorised firms to suggest actions to groups of consumers with shared characteristics, such as those drawing down unsustainably, not saving enough for retirement, or holding excessive cash. A dedicated authorisation gateway will be created for firms that wish to offer this support.
“Targeted support and the Guided Retirement Duty are both so important if we are to help savers make the best decisions for them and we want to work with trustees to get this right.”
Patrick Coyne, TPR
While pension scheme trustees are not the primary focus of the proposals, the FCA explicitly states that trust-based pension schemes and their trustees are within scope. The proposals open the door for providers and trustees to take a more active role in helping disengaged scheme members, particularly at retirement, to make better-informed decisions.
The Pensions Regulator (TPR) has urged trustees to engage with the consultation.
Patrick Coyne, TPR’s interim director of policy and public affairs, said: “It is clear savers need more help to make good retirement decisions. Targeted support and the Guided Retirement Duty are both so important if we are to help savers make the best decisions for them and we want to work with trustees to get this right.
“This is an important consultation, and views shared will also help inform the implementation of Guided Retirement and the evolution of the wider regulatory framework. I encourage trustees to respond to make sure targeted support works for savers.”
David Lane, chief executive at TPT Retirement Solutions, said: “The FCA’s announcement will… provide much-needed counsel for those groups of people who either cannot afford full financial advice or simply do not need it.”
A growing advice gap
Multiple studies highlight a growing disconnect between consumers’ appetite for help and the limited support many actually receive.
Consumer research commissioned by the FCA found that most savers (54%) said they would welcome “a lot of” or “a little” help when deciding whether to invest excess savings. Among existing investors, 68% said they wanted more support when reviewing their investments.
Yet only 9% of adults received financial advice on pensions or investments in the past year, according to the FCA’s Financial Lives survey. Meanwhile, seven million people hold more than £10,000 in cash savings and are not investing, citing a lack of confidence or understanding.
TPT research found that 75% of DC savers aged 45 or over “did not have a clear plan for how to take their money, or even know they had to make a choice at retirement”.
And research from Invesco’s UK Retirement Study shows that one third of non-advised retirees did not seek any information about retirement planning, and 57% took their tax-free lump sum and placed it into a savings account rather than staying invested.
Invesco said: “The announcement from the FCA today will help change the direction of guidance and support for the broader population, ensuring everyone has access to some level of support to help them secure better financial outcomes.”
Hurdles to overcome
While the FCA’s proposals open the door for trust-based schemes to offer more tailored support, trustees now face a complex web of legal, operational and regulatory questions. What counts as acceptable segmentation? How will outcomes be measured? And what happens if members act on nudges that later prove financially harmful?
“We expect targeted support to be free and widely available. To ensure its success, it should be backed by a clear process for fair compensation if things go wrong.”
Yvonne Braun, Association of British Insurers
Aegon pensions director Steven Cameron noted that targeted support could help shape default decumulation pathways, but warned that the success of the initiative may ultimately hinge on how proportionate the regulatory framework proves to be.
“While consumers must have adequate protection, unnecessarily onerous regulations could limit supply,” he said.
“If the Privacy and Electronic Communications Regulations (PECR) class targeted support as direct marketing without any special provisions, the reach of targeted support, particularly for [auto-enrolled people], will be much restricted.”
The Association of British Insurers (ABI) has also urged regulators to ensure that targeted support is widely accessible and properly safeguarded.
“We expect targeted support to be free and widely available,” said Yvonne Braun, the ABI’s director of long-term savings policy. “To ensure its success, it should be backed by a clear process for fair compensation if things go wrong.”
Targeted support and trust-based pension schemes
An extract from the FCA’s consultation paper, CP25/17 – ‘Supporting consumers’ pensions and investment decisions: proposals for targeted support’:
“Together with government and the Pensions Regulator, we aim for pension savers to be supported to make informed choices about how to access their pension in a way that works for them.
“However, we recognise that some will not engage with their pension or do not feel able to make complex decumulation decisions.
“Targeted support seeks to support consumers in making these informed choices, whilst default pension benefit solutions (as part of guided retirement) seek to create a default decumulation option for consumers that do not or cannot engage.”
Final rules expected by year end
The consultation also signals the FCA’s broader direction of travel, including forthcoming reforms to simplified advice and updated guidance on the boundary between guidance and regulated advice.
The current consultation will run for just eight weeks, following a six-week policy sprint that brought together firms, regulators and consumer groups to shape workable customer journeys. Final rules are expected by the end of 2025, with the new authorisation gateway to open in March 2026.
However, trustees and providers alike will be watching closely, not just for regulatory clarity, but for an opportunity to re-engage the large portion of scheme members still navigating their retirement options without enough support.
Sara Benwell is a freelance journalist
