As we approach the end of an eventful year for pensions, it feels as though the system is on the cusp of a series of significant steps forward.
A new Pensions Commission will soon examine the long-term design of retirement provision. The Mansion House Accord is pushing providers to channel more assets into productive finance. And the Pension Schemes Bill, currently before Parliament, will enshrine a DC value-for-money regime, accelerate consolidation, and reshape decumulation with guided retirement pathways.
Together, these initiatives outline a bold new pensions settlement. However, the picture will remain incomplete unless we address the chronic under-engagement of savers.
As the FCA launches its further consultation on handbook changes to ensure targeted support is effective, it is worth reflecting on the scale of its potential to reshape pension engagement.
If auto-enrolment was the solution to the chronic undersaving problem, then targeted support has the potential to solve the chronic under-engagement problem. The FCA’s latest Financial Lives data illustrates the urgency.
FCA: Targeted support will reshape advice for decades
DC accumulation providers have consistently ranked among the least trusted parts of the financial services industry, despite the same firms scoring far higher when they support consumers in decumulation, where interaction is more active and trust naturally follows engagement.
The trust gap is, in large part, an engagement gap.
The FCA is right to frame targeted support in terms of “better outcomes.” However, these outcomes should not be defined solely by whether someone buys a product. Progress is equally measured by a consumer’s understanding of their options, increased confidence, or better preparation to make decisions.
For targeted support to work, it must also be proportionate
In a market where disengagement is endemic, improved comprehension is itself a meaningful result.
For targeted support to work, it must also be proportionate. Suitability judged at the segment level, using reasonable assumptions, provides scalability while remaining consumer-focused. Flexible communications, supported by behavioural techniques and contextual risk framing, can reinforce understanding far more effectively than lengthy disclaimers.
Technology has the potential to supercharge this effort. AI-powered engagement tools, pensions dashboards, and digital nudges are already reshaping how people interact with financial services.
A well-designed targeted support framework can provide the regulatory clarity and confidence firms need to embed these innovations responsibly, ensuring they enhance saver understanding in a way that is both safe and scalable.
By engaging proactively with regulation, the industry can unlock the full potential of these tools while maintaining trust and consumer protection.
Reassurance from the FCA on evidentiary expectations would help give firms confidence to innovate without fear of retrospective enforcement
The regime’s principles-based design is also welcome. Allowing firms to test, learn, and refine approaches over time will be essential.
Clear alignment with Consumer Duty and reassurance from both the FCA and FOS on evidentiary expectations would help give firms confidence to innovate without fear of retrospective enforcement.
The more flexible the regime, the greater its potential. Consumers often want prompts that help them navigate choices as much as product-specific recommendations.
Exploring a tiered model could allow for both. Similarly, areas such as annuities and consolidation are pivotal moments in the pension journey; finding safe and proportionate ways to incorporate targeted support here could significantly improve decision readiness.
This could be the single most important outcome: lifting providers out of the trust doldrums by showing that the industry can help savers make sense of their money
Targeted support will not close the advice gap overnight. However, if it can make financial services more accessible, relevant, and confidence-building for the millions who will never pay for full advice, it could transform consumer trust.
In pensions especially, this could be the single most important outcome: lifting providers out of the trust doldrums by showing that the industry can help savers make sense of their money, not just warehouse it.
As we look ahead, the pensions landscape is crowded with change — from consolidation and productive investment to guided retirement and regulatory reform.
But the greatest opportunity of all is to build trust and engagement on top of the savings foundations that auto-enrolment has created. Get this right, and the system will not only grow in scale but truly flourish in purpose.
Robert Holford is insights director at Altus Consulting, part of Accenture
