The consultation highlights the need for more support due to the complexity of pension decisions and the low number of consumers receiving regulated advice.
Targeted support is designed as a semi-personalised halfway house between guidance and individual financial advice. It would be regulated advice aimed at groups of consumers with common characteristics and, importantly, could include suggestions for specific investment products.
This insight is intended to inform pension scheme trustees about the FCA’s proposals and consultation questions which the FCA is particularly asking of pension scheme trustees (of schemes with DC pension savings).
In this issue we look at:
Background
Since 2018, the FCA and The Pensions Regulator (TPR) have collaborated on a joint strategy1 to support individuals with their pensions. The FCA confirmed2 in November 2024 that it planned to consult on rules for better support for consumers in retail investments and pensions in the first half of 2025. For the FCA’s purpose, "consumers" include members of trust-based pension schemes who have DC pension savings.
At the same time as the FCA confirmed it would consult on better support, the Information Commissioner’s Office published a joint statement3 with the FCA and TPR which intended to “provide greater clarity for firms and pension scheme trustees or managers to support their customers decision-making through their communications” in line with the FCA’s Consumer Duty and TPR’s general code4 and guidance on communications with DC members”5.
The dividing line between guidance and advice needed to be clarified and the joint statement was a useful reminder. However, this was only expected to be an interim step before further guidance was introduced to support people with their understanding and decision-making.
The key proposal
The FCA proposes a new form of support called targeted support, which allows firms to make specific recommendations for groups of consumers with common characteristics.
Targeted support involves providing structured suggestions based on limited information about a consumer's circumstances. By providing structured suggestions to groups with shared characteristics, this type of support is intended to be scalable and affordable – potentially free to the consumer. Targeted support can be offered proactively or reactively, helping consumers take more timely and informed decisions. This will enable firms to reach and assist those they might not otherwise be able to serve.
The FCA states that the targeted support framework is not intended to extend regulation to generic advice or guidance. The FCA also confirms that it plans to simplify and consolidate the existing guidance on the boundary between information and guidance on the one hand, and different forms of advice on the other.
Targeted support and guided retirement
Targeted support is aimed at savers who are willing and able to engage in retirement choices. For those who do not or cannot engage, the FCA, Treasury and the Department for Work and Pensions (DWP) are exploring ‘guided retirement options’ (i.e. default solutions providing a structured way for savers to access their pension benefits without requiring complex decision-making). Provisions are included in the recently published Pension Schemes Bill.
A default solution for savers who may not engage with their pension or feel unable to make complex decumulation decisions would not fall under targeted support.
Considerations for trustees
Trustees may need to consider how they can provide targeted support or a version of it that applies solely to 'in-scheme' benefits. This could involve partnering with FCA-authorised firms to deliver targeted support for scheme members.
Trustees should be aware that support related solely to 'in-scheme' occupational pension scheme investments generally does not involve regulated activities without authorisation. The FCA will continue to work closely with TPR to provide clarity on when trustees might be undertaking a regulated activity.
The FCA welcomes feedback on the proposals by 29 August 2025 and aims to publish a policy statement by the end of 2025. While most questions are aimed at regulated firms, there are two questions that the FCA specifically asks of trustees:
| Based on our proposals in this paper, do pension scheme trustees want to provide a form of support like targeted support to their members? If so, is this support intended solely for ‘in-scheme’ benefits, or does it also include FCA-regulated investments? | |
| Do trustees have any practical examples of the support you wish to provide? Do you believe this is deliverable in the existing framework (i.e. can be delivered currently)? If not, why not? (For example, are there concerns about inadvertently carrying out regulated activities such as arranging?) |
Trustees should consider providing feedback on how these proposals might impact their ability to support pension scheme members.
However, until TPR and the FCA provide further clarity to trustees on this subject, and the reforms included in the recently published Pension Schemes Bill are clearer, trustees will continue to be concerned about supporting members without undertaking a regulatory activity or financial promotion.
