Pensions UK urges whole market approach to FCA’s proposed pension transfer reforms

In its response to CP25/39: Adapting our requirements for a changing pensions market, Pensions UK says many of the reforms reflect long standing industry concerns and represent a step towards improving consumer outcomes. However, the response highlights significant operational and regulatory challenges that could undermine the reforms’ effectiveness without clearer alignment across the DC pensions system.

Call for unified regulatory action

A significant proportion of pension transfers occur from trust-based occupational DC schemes to FCA-regulated products, including SIPPs. Pensions UK therefore warns that limiting the scope of the reforms to FCA regulated schemes will fail to address the areas of greatest consumer risk.

The Department for Work and Pensions (DWP) and The Pensions Regulator (TPR) should develop parallel proposals to ensure consistency, reduce market complexity, and deliver equitable protections for all savers.

Industry-wide ban on transfer incentives

Pensions UK calls on the FCA to introduce an explicit ban on cash and other transfer incentives, citing behavioural insights research that demonstrates strong consumer bias toward upfront rewards, even where transfers could reduce long term pension value. The response warns that relying solely on Consumer Duty will not sufficiently protect savers, and that stronger enforcement is needed if this approach is pursued.

Concerns over fragmented consumer journeys

As drafted, the proposals risk creating disjointed and confusing customer experiences, particularly where comparison tools prompt transfer decisions before scam prevention checks or stronger nudge requirements are triggered. Clearer sequencing and regulatory alignment are essential to avoid consumer frustration or disengagement.

Need for coordination with broader reforms

Pensions UK highlights overlap with the Value for Money (VfM) Framework, small pots consolidation and Pensions Dashboards. Without alignment, providers risk duplicated effort, inconsistent messaging and increased costs that could have unintended consequences for the push to consolidate small pots. Continuous user testing remains essential to ensure comparisons remain intuitive and genuinely informative.

Improving communication of full scheme value

While supporting clearer comparison information, focusing primarily on charges and investment performance risks obscuring key employer-provided benefits such as contribution structures, employer borne costs, in scheme guidance, and integrated retirement support. Pensions UK recommends clearer guidance to ensure trustees can explain scheme value without straying into regulated advice.

Support for modernised digital tools

Pensions UK strongly backs improvements to digital modellers and comparison tools but calls for unified regulatory principles across FCA, TPR and FRC to avoid inconsistencies in projection methodologies and enhance consumer understanding.

Philip Brown, Head of DC at Pensions UK, said: “Savers must be properly supported with increasingly complex decision-making at retirement, and these proposals are a strong first step. But for these reforms to achieve their intended consumer benefits, regulators must work together on a coherent whole market framework. Without alignment, savers will continue to face uneven protections and a fragmented journey at a time when clarity and confidence matter most.”

The full response to the consultation can be read here.

Mark Smith, Head of Media Relations

020 7601 1726 | [email protected]

Cali Sullivan, Senior PR Manager
020 7601 1761 | [email protected]