In late 2022, Morningstar’s policy research team evaluated global retirement systems, including the UK’s pension system and seven others. They found that defined contribution plans shift investment risk to individuals, and unconflicted fiduciary advice remains a challenge. Too much choice can be counterproductive, and minimizing fragmentation of workplace plans can lower costs and increase engagement.

Recent policy and regulatory announcements include the Financial Conduct Authority’s Advice Guidance Boundary Review and the Institute for Fiscal Studies’ Pensions Review. The government’s Pension Schemes Bill aims to consolidate smaller schemes, measure scheme value-for-money, and encourage investments in UK private assets. Pensions Minister Torsten Bell highlighted the need to simplify the system for better retirement support.

Morningstar’s analysis shows progress in retirement savings but limited options for decumulation. The Pension Schemes Bill addresses this by requiring pension schemes to provide default solutions for retirees. The FCA’s proposals aim to close the advice gap by introducing targeted support and simplified advice options for consumers seeking professional help with their pensions and investments.

The proposals from the FCA aim to provide more support to consumers in making decisions about their pensions and investments. With only 9% of people receiving regulated advice, the new framework could enable more consumers to benefit from professional help. The Pension Schemes Bill shows promise in addressing long-standing issues in the pensions landscape and improving confidence in retirement savings.

Read more at Morningstar: Is The FCA Finally About to Close The Pensions and Retirement Advice Gap?