Mary Starks, director of competition at the Financial Conduct Authority, has said competition is not a panacea with regard to the pensions industry.
Responding to a question from Con Keating, member of the steering committee of the financial econometrics research centre at the University of Warwick, about the uniqueness of pensions and whether competition was the right rule to be applying, she said: “I think competition would be the wrong tool to rely on on its own but it forms an important part of the various pressures that are needed to keep this market honest.
“Part of it is regulation and more straightforward consumer protection, part of it is ensuring that people have access to the right support and are being presented with decisions in a sort of straightforward responsible way so that they are able to take those decisions and part of it is realising that there are the competitive pressures on value so the options they have are good value for money so it’s a part of the picture, it’s not the panacea.”
Speaking at the same event, Tim Sharp, pensions and investments officer at the Trade Union Congress, responded to a question about whether competition was doing the ordinary man in the street any good.
Mr Sharp said: “I think competition has a limited useful role to play in retirement provision. I think we are where we are with the accumulation stage, we’ve got Nest and particularly other master trusts playing an important role in auto-enrolment.
“I think we’ve seen the importance of Nest’s presence in particular catering to those employers that are staging now that are challenging for other providers to deal with.
“What would be quite interesting to look at is what we should be looking at for the decumulation stage. I think there is a strong need for a Nest type vehicle. That can provide one or a number of decent default options that are well researched and that work well for most people.”
Vanessa Owen, head of retirement solutions at LV, said: “Obviously one sits in a competitive environment. What do I think the real value of competition will be? I think it will be in innovation.”
ruth.gillbe@ft.com
