UK FCA Proposes Targeted Support to Bridge Pension Advice Gap

The UK Financial Conduct Authority (FCA) has published proposals designed to provide extra support to millions of savers, helping them navigate complex pension decisions. The initiative forms part of the broader Advice Guidance Boundary Review (AGBR), which the regulator is conducting alongside HM Treasury to bridge the gap between basic information and full financial advice. According to the FCA, more than 16 million people in the UK save into defined contribution pension schemes. However, data from the regulator's 2024 Financial Lives survey shows that 75% of consumers aged 45 and older lack a clear plan for withdrawing retirement funds or are unaware that they need to make a choice. Furthermore, only 9% of adults took full regulated advice over the prior 12-month period, leaving many people ill-equipped to make critical long-term financial decisions. Under the proposed framework, regulated firms would be permitted to offer "targeted support" to consumers without crossing into full regulated personal recommendations. This mechanism would allow providers to offer tailored suggestions to specific consumer cohorts facing common circumstances, such as individuals drawing down their pension at an unsustainable rate or those uncertain about how to structure retirement income. The FCA expects targeted support to be delivered at no cost to the consumer. The regulator has outlined these measures in Consultation Paper CP24/27, inviting industry stakeholders and consumers to provide feedback by mid-February 2025. Alongside the consultation, the FCA released a separate discussion paper (DP24/3) to explore wider regulatory adjustments, including the integration of digital tools, pension pot consolidation, and rules governing Self-Invested Personal Pensions (SIPPs). Sarah Pritchard, executive director of consumers, competition and international at the FCA, highlighted that the reforms aim to make guidance and advice accessible and affordable when savers need it most. The regulator added that it plans to publish further proposals covering targeted support and simplified advice for other retail investment products in 2025.