Personal pension providers told to warn of inflation risks

Personal annuity provider must send inflation A warning to customers who have large amounts of cash in their funds under a new proposal announced by regulatory agencies.

In a move aimed at the fast-growing individual annuity market, the Financial Conduct Authority (FCA) encourages providers to do more to help unadvised clients make better investment decisions. Is forcing to.

Approximately 125,000 people without the help of an advisor open a non-workplace pension each year. These schemes mainly consist of individual annuities and self-invested individual annuities.

They are often used by self-employed people who do not have access to workplace pensions and consumers who want to supplement their workplace pension savings or integrate existing pension pots.

However, the FCA said individuals opening non-workplace pensions (NWPs) without the help of advisors find it difficult to “identify appropriate investments or leave large amounts of pension pots in cash.” rice field.

Under its proposal announced Thursday, both individual and self-invested individual annuity providers warn consumers that more than 25 percent of their individual annuity assets have been invested in cash for more than 6 months. I have a duty.

“Our suggestion for cash warnings is to warn consumers who have invested in cash that their pension savings are at risk of being compromised by inflation. The cumulative effect of investing in cash is that retirement pension pots We would like to encourage these consumers to consider investing in growth assets as they can be much smaller, “the FCA said in a discussion on the proposal.

Companies also need to provide off-the-shelf standardized investment solutions to clients opening personal annuity accounts.

“As the non-workplace annuity market develops, the range of investments that can be included in the NWP is increasing,” said the FCA.

“Consumers without advice on buying NWP may have little investment expertise and may not find it easy to tackle investment choices and complexity.”

With the proposed changes, personal pensions will approach the regulations that apply to workplace planning. Savers are now defaulted to off-the-shelf investment strategies with fee management and strict oversight by an independent governor.

However, the FCA has decided to oppose extending the same rates and governance protection to non-workplace pensions.

Former FCA board member Mick McAteer wrote in a tweet: [the] Various treatments of people who save through the workplace. .. .. And those who don’t save through the workplace? Why do they deserve less protection? ”

The FCA intervention is due to the increase in the share of deprecated sales in the non-workplace pension market from an average of 8% in 1988-2012 to 35% in 2019. According to the FCA, a wide range of funds have been sold to the mass market and 50% of new sales have not been advised.

Becky O’Connor, Head of Pensions and Savings for Interactive Investor, a DIY investment platform, said: that too. “

She added that Sipp investors who use Interactive Investors generally did not “save cash.”

The FCA will respond to the talks in February next year.

Personal pension providers told to warn of inflation risks Source link Personal pension providers told to warn of inflation risks

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