Industry experts have called on the Financial Conduct Authority (FCA) to introduce greater consistency and transparency through a number of reforms, as it considers what changes may be needed to aspects of its pensions regulatory framework.

The FCA launched a consultation on whether there were any other areas of its regulatory framework that may need to be reformed to enable firms to better support consumers at the end of last year, alongside a consultation on plans to introduce targeted support for pensions.

In particular, the consultation was looking at whether further changes might be required to better support consumers, such as to the use of digital tools, requirements for defined contribution scheme transfers and consolidation, and rules regarding self-invested personal pensions.

Industry experts have suggested that some reform is indeed needed, as The Investing and Saving Alliance's (Tisa) response called for greater consistency in pension projection calculations across regulatory frameworks.

Tisa said that the evolving pension landscape has been "significantly" shaped by digital services, hailing the proposed changes in the FCA’s discussion paper as a "step in the right direction toward enhancing these digital solutions".

However, it argued that with digital tools and the pensions dashboard becoming increasingly central to consumer engagement, ensuring alignment in projected retirement outcomes is essential to maintaining consumer confidence and informed decision-making.

Given this, Tisa emphasised the need to ensure consistency across the industry, arguing that there remains a "critical" need to ensure that post-dashboard modellers and tools follow the same core projection methodology to avoid confusion and potential misinformation.

"As the pensions industry continues to evolve, it is crucial that we provide a seamless and consistent experience for consumers across different regulatory regimes," Tisa head of retirement, Renny Biggins, Head of Retirement at TISA said.

"With over 18 million active members in the auto-enrolment framework, all individuals should have equal access to clear and reliable pension projections, regardless of whether their schemes are regulated by the FCA or The Pensions Regulator (TPR).

“To ensure clarity and trust in pension projections, we must align core calculations across all digital tools, including key features illustrations, statutory money purchase illustrations, and modelling services, and this review presents an opportunity to streamline these requirements.

"We also need flexibility to enable firms to innovate and develop engaging propositions that allow consumers to scenario plan, including the ability to change variables such as growth rates and view projected outcomes on a stochastic modelling basis.

"TISA urges policymakers, including the Department for Work and Pensions (DWP) and TPR, to collaborate with the FCA in driving alignment across pension regulations."

This is not the only call for reform made in response to the FCA's consultation, as The People's Pension also called for greater transparency and industry-wide collaboration to ensure pension transfer decisions are made in the best interests of savers.

The call for action comes after research from The People’s Pension found that individuals could miss out on as much as 20 per cent of their pension savings due to misinformed transfer decisions, equating to a potential loss of £1.2bn across the UK in just one year.

In addition to this, further research, conducted in partnership with the Behavioural Insights Team, found that financial incentives such as free cash offers can lead savers to transfer their pensions without fully considering the long-term consequences.

Given this, The People’s Pension argued that the FCA should introduce a requirement for pension providers to display simple, comparable, and easy-to-find information on investment performance, charges and customer service, and put a ban on pension transfer incentives.

It also suggested that the FCA should introduce an obligation on the receiving pension scheme to flag important differences between pension schemes, which may impact the final retirement pot, when processing a transfer.

In addition to this, it encouraged pension providers and regulators to work together to create a consumer facing value-for-money framework to help savers make more informed decisions.

It also suggested that commercial pension dashboards be delayed until value-for-money metrics are displayed across all pensions.

The People's Pension CEO, Patrick Heath-Lay, said: “For too long, savers have been left in the dark when making pension transfer decisions - that needs to change.

"We’ve been campaigning for a step change in transparency, and this consultation is a crucial moment to fix a system that isn’t working in saver’s best interests.

“Our five-point plan sets out practical reforms that would create a more transparent and consumer-focused pensions landscape, helping to secure better retirement outcomes for millions of UK workers.

"This would ensure people can make informed choices about their future. While the consultation is a step in the right direction, the industry must now work together to make it happen.”

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