UK regulators publish plan to protect pension savers

UK regulators on Thursday unveiled a joint plan to get better value for money on pension investments.

The Financial Conduct Authority and Pensions Regulator said they would look to set and enforce “clear standards” and help savers make informed decisions as part of the “pensions journey”.

The regulators said the way people save for and take their pensions had “changed fundamentally and will continue to do so”.

“Automatic enrolment (has created new responsibilities and choices for UK consumers and for employers. The shift away from defined benefit pension schemes, low levels of savings, low interest rates and increased longevity all create long-term challenges,” their initial report said.

“In the shorter term, problems such as scams and poor pension transfer advice put people’s savings at risk.”

Both the FCA and TPR have been criticised for failing to protect pension savers in a series of high profile cases such as the collapses of high street retailer BHS and government contractor Carillion along with the scandal of former British Steel workers being mis-sold products.

In February, a parliamentary committee said former British Steel workers were "bamboozled" into shifting their pensions into investments with punitive fees by "dubious" and "parasitical" financial advisers.

It found members had moved their cash into "unsuitable funds characterised by high investment risk, high management charges and punitive exit fees".

During its investigation, the committee was told of advice fees typically around 2% of the transfer value - and that the receiving funds sometimes imposed high annual charges and exit penalties ranging from 5% to as high as 10%.

The collapses of BHS and Carillion with large pension fund deficits while management paid out dividends also put TPR in the spotlight, ultimately leading to the resignation of chief executive Lesley Titcomb.