The Financial Conduct Authority (FCA) has launched a consultation on rules intended to better support consumers using digital pension planning tools and consumers making non-advised decisions to transfer defined contribution (DC) pensions. 

The FCA previously shared a discussion paper in December 2024 calling for input on areas of its regulatory framework for pensions that may need to evolve, alongside the wider programme of policy change across government and regulators, to meet the future needs of consumers.

Based on the industry feedback received, the FCA is now consulting on several proposals, including plans for new regime for interactive digital pension planning tools for in-force pensions.

The FCA's consultation suggested that, in an increasingly online environment for consumers, digital tools and modellers provide an opportunity to improve support and engagement with pensions.

However, it acknowledged that the current rules may be limiting firms from offering good tools and modellers, with its plans for a new regime therefore intended to allow consumers effective and engaging digital tools with sufficient protections against potential harms.

It also outlined plans for a new process to support non-advised consumers to make informed decisions about whether and where to transfer or consolidate DC pensions. 

The FCA noted that while savers may want to consolidate pots, with demand for consolidation expected to increase when the introduction of pensions dashboards raises consumers’ awareness of how many pots they hold, it is important that transfers and consolidation are efficient and in the consumer’s interests.

"We would like views on whether changes in the regulatory framework could help to ensure better consumer outcomes," it stated.

In particular, the FCA has asked for views on the current timeline surrounding pension transfers, as well as how it can better ensure non-advised consumers are encouraged and enabled to consider and compare the features and relative benefits of ceding and receiving schemes

"We know that, when a transfer is requested, many firms flag to consumers where ceding schemes have valuable benefits," the FCA stated, clarifying, however, that, currently, different firms communicate this to the consumer in various ways.

The FCA is also consulting on plans to change its framework surrounding self-invested personal pensions (SIPPs), following concerns that regulation has not always kept pace with the variety of business models.

In addition to this, it called for further ideas and insight on what changes could enable investment in productive finance assets, where this can improve long-term outcomes for pension savers.

"For example, in recent years we have made significant changes to the permitted links regime and would welcome comments on whether there is more we could do," it stated.

The consultation, which is open until 12 February 2026, was published at the same time as the FCA's near-final rules for targeted support, to ensure stakeholders can consider the proposals in the light of these new rules.  

The proposals have seen early industry support already, as People’s Pension welcomed the proposed changes on transfers, arguing that placing greater emphasis on clear, objective comparisons between ceding and receiving schemes is essential.

This comes after People’s Pension’s latest Transfer Outcomes Index revealed a wider pattern of detriment, with savers at risk of losing £1.7bn in a single year from poorly informed transfers across the market.
 
Given this, People's Partnership CEO, Patrick Heath-Lay, highlighted the changes as "a big step forward as the FCA has got to the heart of the matter: it’s the quality of the decision that matters most when transferring a pension".

"People need help to accurately compare different pension products: it’s confusing, complex and clear communication from pension providers will help," he stated.
 
“Transferring a pension is not like switching a bank account - there are long term consequences from poorly informed decisions.
 
“The next step should be to consider how these proposals fit with the value for money agenda. From 2028 workplace schemes will be rated on the value they offer but should be extended to all pension providers.
 
“The FCA should also be thinking ahead to how pension products will be seen and compared on pension dashboards when they launch later this decade. They’re right that dashboards will transform the way people engage with pension saving - but the logical next step should be clear value for money ratings on dashboards."

Association of British Insurers (ABI) head of long-term savings policy and assistant director, Rob Yuille, agreed, suggesting that "the FCA is right to seek consistency in pension transfers, to achieve good customer outcomes and efficient transfer times".

However, he clarified that, in finalising the rules, it is "critical" for the FCA to work with industry to ensure the process is not cumbersome for consumers, and for the Department for Work and Pensions (DWP) to apply the same measures for occupational pensions.

"Similarly, balancing uniformity with flexibility is vital to make sure the projections regime makes sense to consumers," he stated. "These proposals reinforce the need for FCA and DWP both to align, and to adapt to evolving policy, for example ,on pensions dashboards.”

This is not the only concern, as Heath-Lay argued that "while there is much to welcome in these proposals, stopping short of banning incentives is a missed opportunity".

"Our research shows how quickly incentives can distort decision-making and lead to long-term losses. We look forward to working with the FCA and government to ensure reforms genuinely protect pension savers," he stated.

Transfer work was not the only proposal to garner industry attention, as Broadstone head of DC workplace savings, welcomed the proposals new regime for interactive digital pension planning tools giving firms flexibility to tailor the projections in interactive digital tools to the understanding and engagement needs of their target market.
 
“It is important that pension savers are able to forecast their retirement savings journey so that they can make long-term plans for the future and get a clear picture of what their retirement living standards are likely to be. Enabling greater innovation in this area will help firms provide better tools and communications to pension savers," Hopkins stated.
 
“It could give people the opportunity to see in real-terms how changes in their pension accumulation such as increasing contributions or working for longer could impact their retirement income.

"With pensions dashboards and targeted support coming on stream shortly, it will provide savers with a growing suite of digital tools to help achieve financial security.”
  

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