Retirement Outcomes Review: Investment pathways

Over the last few years the Financial Conduct Authority (FCA) has sought to understand how the pension freedoms are affecting consumers through its Retirement Outcomes Review (ROR). As a result of the ROR, the FCA is introducing a range of measures designed to help protect consumers from undue risk, and support them in making better decisions and achieving better outcomes.

While the measures primarily affect unadvised clients, we wanted to provide a summary of the measures and changes you will notice from us over the coming months, starting from February 2021.

Investment pathways

The FCA is concerned that many consumers are going into drawdown without realising that they need to choose investments (particularly where they have moved to a new pension product to access drawdown), or without considering whether their existing investments are still appropriate. To help address this, the FCA is introducing an ‘investment pathways’ process for clients accessing pension benefits without taking advice. Providers will be required to ask clients how they plan to use their pensions over the next few years, and offer investment solutions to suit their requirements. However, the FCA also recognised that this problem is less prevalent among many SIPP providers, as they tend to have a higher proportion of advised clients, as well as more clients who are used to making investment decisions. As such there is an easement for providers with relatively low numbers of clients taking benefits without taking advice.

Curtis Banks currently meets the criteria for this easement, and we therefore won’t be offering investment pathway solutions. You will still see some changes with us though, as we will ask clients whether they wish to use the pathways process to help choose suitable investments. Where that is the case, we will invite them to use the new Money and Pensions Service comparator tool to seek a suitable alternative provider offering investment pathways, as you can see in the example below.

Investment pathways

Clients will still be able to take benefits with us without taking advice if they are happy to choose their own investments or keep their existing assets. You’ll see these changes in our:

  • Drawdown and drawdown transfer forms
  • Online application form and e-sign online journey
  • Risk warnings documents.

Cash warnings

Providers will also be required to issue warnings where unadvised clients’ funds are predominantly held in cash, or cash-like investments. The FCA is concerned about pensions unintentionally left in cash being eroded by the effects of inflation when other types of investment may be more suitable for long-term investing. There are requirements for contacting clients who are already predominantly in cash, as well as ongoing requirements for those who become affected by the rules in the future.

We will be contacting clients who are already affected from February 2021 before meeting the ongoing requirements going forward.

Costs and charges

Finally, the FCA wanted to help ensure consumers have a better understanding of how much they are actually paying for their pensions once they begin to access benefits. Providers will be required to give clients information about the actual costs and charges, in pounds and pence, that have applied to their pension that year. This requirement applies to both unadvised and advised clients, and you’ll begin to see this information provided in your clients’ annual statements.

If you have any questions, please get in touch with your usual business development manager or by contacting your usual Curtis Banks representative. Alternatively, please visit to find contact details for your usual Curtis Banks representative.

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