The FCA has today confirmed its intention to require providers to offer investment ‘pathways’ to non-advised drawdown customers.
In addition, anyone investing 50% or more of their pension in cash will be required to make an active decision to do so. New drawdown pathways and cash holdings requirements will be in force from April 2020.
“The FCA is clearly attempting to protect consumers from harm through the introduction of investment pathways,” AJ Bell senior analyst Tom Selby.
“However, in doing so it risks pushing savers into retirement solutions that do not meed their specific needs and hard-wiring disengagement at exactly the point people should be taking charge of their fund. While the FCA’s determination to make pathways simple is commendable, the idea all retirement income options can be covered by just four investment solutions is unrealistic.
“Furthermore, if people’s personal circumstances change – as they have a habit of doing – a previously chosen pathway may become inappropriate and will need to be reviewed. Ensuring people are aware pathways are not a catch-all solution will be absolutely critical to protect consumers who choose them.”
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