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HMTs Freedom and Choice response and FCA consultation summary and next steps

The ABI has prepared a summary of the key points in the HM Treasury response to the Freedom and choice in pensions consultation and the FCA consultation paper published on July 21, 2014.

Find below a short summary and the further detailed briefing available to download as a pdf document.


The two documents represent a clear, coherent and pragmatic package both in terms of how to deliver and structure the Guidance, and how to deal with the tax and DB consequences of the Budget.

Our key asks are reflected, in particular delivery of the Guidance through MAS and TPAS as “delivery partners”, with HMT taking the overall lead until the service matures; the annual allowance approach to combat tax abuse; distributing the Guidance levy beyond the pensions industry; and maintaining the right of DB members to transfer out.

However, we did not achieve an explicit commitment from HMT in their document to keep the role of providers and utilities in delivering the Guidance under review (although the Economic Secretary to the Treasury said as much in an interview).

Our work with KPMG has made an important contribution to the thinking of HMT and FCA, with key components of our analysis being reflected in the two documents:

  • The Guidance will “inform, educate and help empower pension savers”, rather than straying into product or provider recommendation:
  • It will be pot-based but the guider will prompt the individual to think about all their pension pots;
  • The consumer will be asked to supply certain pieces of information;
  • The Guidance will give consumers key facts and consequences about their options and provide information on next steps for the consumer to take forward, as well as appropriate signposting.
  • HMT will establish a strong, recognisable brand across all providers of the Guidance, to ensure people can easily distinguish the service from other sources of information or services.

On preventing tax abuse, the annual allowance approach is relatively straightforward, will ensure that phased retirement is not penalised (as 98% of savers over 55 will not be affected), and is compatible with auto-enrolment.

A lot of work now needs to be done to get the detail right, as well as thinking about the wider implications. The immediate tasks include responding to the FCA CP on the rules for how providers should signpost to the Guidance service; the technical consultation on the new tax framework; the FCA’s levy consultation; working with the delivery partners to create a signposting template; and implementation. The consultation and legislation calendar is set out at the end of this briefing.

We are extremely grateful to members for all their help with this project so far and are looking forward to working with you on the next stage of this.

Download the full summary and next steps (pdf 453kB)

Last updated 01/07/2016