Collective defined contribution (CDC) and the pension pot for life would need a "clear delivery road map stretching over a decade", Financial Conduct Authority (FCA) chief executive, Nikhil Rathi, has said, stressing the need for the industry to "act today to plan for tomorrow".

Speaking at the JP Morgan Pensions and Savings Symposium, Rathi said that there is a “window of opportunity now, as we reach this generational crossover, to put in a framework fit for the future”.

"But there is no need for consumers, regulators or industry to wait for the outcome to emerge before taking action to engage consumers," he added.

“We can try to save more, receive, seek and impart better support and advice, improve value through transparency and hold a serious conversation about risk. We can check whether products really are value and are in invested in the right areas for savers and the economy."

Indeed, Rathi argued that, beyond saving more, the industry needs to test whether current products are making the most of the savings already accumulated, noting that “the government is approaching this question through proposed structural reforms, with a consolidation agenda for schemes not delivering value”.

“The proposed pension pot for life – which the Budget confirmed was being explored - could add simplicity but would also be a profound change to the system and the role of employers," he continued.

"Collective defined contribution (CDC) schemes are increasingly talked about as a route to increasing returns... However, CDCs are also complex and both the scheme and any communication to savers must be managed carefully.

"CDC and the pension pot for life would need a clear delivery road map stretching over a decade. And once that map has been agreed, we will need a period of stability to focus on execution."

But Rathi also stressed the importance of at-retirement support, noting that “however well pension schemes are invested, when retirement approaches, consumers have to choose how to turn their savings into income”.

He stated: “With freedom comes responsibility, particularly given the consequences for your future.

“We know that freedom tastes all the better with some guidance and steering along the way – whether it is to wear long trousers before your first bike ride, have a designated meeting point if we get off at the wrong train stop, or take a Berocca before Freshers’ night.

“And it is all the more important to get that support with a pension so that you can maximise your financial freedom in retirement.

“We can look to the past to see where we can learn from mistakes or how we can bolster the future. But there is much we can do in the present.”

Rathi suggested that the Advice/Guidance Boundary Review launched last year will be a key aspect of this work, as the FCA looks to "empower and support consumers".

“We want to support the emergence of commercially viable, high-quality models of support for consumers to access through regulated channels. We are open-minded as to how digitalisation can support these goals," he continued.

“That means firms will have to manage risk rather than eliminate it. Firms must overcome their reticence to offer support for fear of being too close to the boundary or due to an overly cautious risk appetite."

However, Rathi clarified that “such support does not eliminate the need for consumers to engage and pension dashboards - which the FCA supports - are a tool that can help with that”.

“This should make it easier to plan for retirement, get advice and make informed decisions,” he stated.

Discussing pensions adequacy issues more broadly, Rathi said that while auto-enrolment should be recognised for the success it has been, “significant gaps and inadequacies remain”.

However, he explained that while some want to emulate countries like Australia, where employer contributions to the superannuation fund are 11 per cent, increasing to 12 per cent in 2025, the 3 per cent employer requirement in the UK already presents an affordability challenge for "many businesses".

"Most of us are still not saving enough or engaging early enough with our pensions’ investments," he said. "Whatever the route to improving this and this is challenging as we come through of a cost-of-living squeeze, addressing the adequacy of savings is vital."

Amid so much change, Rathi also emphasised that FCA “won’t lose sight of our core objectives either”, stating that the watchdog has a “relentless focus on preventing scams and fraud”.

In particular, Rathi noted that the FCA is “alert” to the fact that when pension dashboards go live, risks of scams may increase, and that the watchdog wants to work with industry on measures to mitigate those risks.

“We are also intervening where we see poor practice in firms, such as pockets of poor practice in SIPP (self-invested personal pension) markets. Operators must act to deliver good outcomes for retail customers and avoid causing foreseeable harm to them,” he added.

“We expect firms to ensure that their retention of interest on cash balances provides fair value and is understood by consumers.

“It is not unreasonable to expect firms to review their approach and stop double-dipping – charging high fees but also taking a significant chunk of interest.”

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