The Financial Conduct Authority (FCA) should provide further clarity on how trust-based pension schemes will be able to confidently make the most of targeted support, the Association of Consulting Actuaries (ACA) has said.

The FCA is currently consulting on proposals to introduce targeted support for pensions as part of the Advice/Guidance Boundary Review, seeking views on potential plans to allow firms to provide targeted support to consumers in different scenarios.

However, the ACA's response argued that further clarity is needed on how trust-based schemes will be able to confidently make the most of targeted support, even if this is to refer further consideration of this matter to the Department for Work and Pensions (DWP) and The Pensions Regulator (TPR).

"There is no reason why a provider of targeted support should not obtain information about a member in a trust-based scheme and about the scheme itself," ACA DC Committee chair, Tess Page, said.

“However, consideration needs to be given as to how this would work in practice, especially where there is no existing link between the trust-based scheme and the provider and bearing in mind that targeted support will require ongoing assessment of whether it is producing good outcomes.

"Consideration will need to be given to introducing a framework that provides trustees with the necessary comfort that allows them to provide targeted support, or something equivalent."

This was echoed by Sackers partner, Jacqui Reid, who noted that while these proposals are not intended to apply to trustees of occupational pension schemes directly, it is understood that the FCA is working closely with the DWP and TPR with the aim of either extending them to trustees or providing something similar in the trust space.

"However this is done, it will be imperative that trustees remain able to support their members with pensions guidance, without straying into the sphere of regulated advice," she continued.

"Parameters will need to be carefully and clearly drawn as grey areas can encourage a risk-averse approach which, ultimately, constrains the help provided to consumers.”

More broadly, the ACA emphasised that, in order to be most helpful to individuals, and to provide a meaningful step-up in what is on offer currently, targeted support must offer elements of both guidance and a personal recommendation, warning that, if the framework tilts cautiously towards more generic guidance the opportunity will be wasted.

However, the ACA acknowledged that a significant number of people will also still need to take personalised advice, suggesting that it would be helpful for targeted support to direct individuals to such advice where a need is identified.

In particular, the ACA warned that the current pensions advice allowance is not currently sufficient to cover people taking advice beyond the basics.

The ACA response also noted that the definition of “better” is subjective and hard to predict at a point in time, given the long-term nature of retirement and investment decisions.

Given this, it suggested that an alternative approach would be to seek to prevent “poor outcomes” as a route to better - for example, unsuitable / inefficient tax decisions, investments that are misaligned with an individual’s term to retirement, etc.

Page said: "We welcome the consultation, and ACA strongly supports creating a framework that will enable more people to access advice or support, at an affordable price.

“While there are inevitable risks associated with the proposals, these can be mitigated and monitored over time and should not prevent moving forward with a view to democratising access to support to individuals."

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