FCA Pushes Ahead With Targeted Support

The regulator "stands ready" for the regime to go live in April 2026. Also announced: proposed changes to pension projections, DC transfers and the charge cap.

Three December 2025 announcements by the Financial Conduct Authority have significant pensions implications:

• The framework for the new targeted support regime will be much as originally proposed, though with certain changes including in respect of annuities. The regime is expected to take effect from April 2026.
• New regimes are proposed for pension projections under contract-based schemes, and for transfers between such schemes.
• The FCA plans to make changes to the charge cap for contract-based schemes, to accommodate certain performance fees.

Targeted support

Targeted support is a new regulated proposition – a halfway house between guidance and advice. It involves the delivery of ready-made suggestions to consumers, based on their alignment with pre-defined consumer segments (groups with shared needs or objectives). Firms with the requisite FCA permission will be able to provide targeted support to help consumers with their pensions and investment decisions.

Prior consultations

The FCA consulted on principles as to targeted support in December 2024, and on a proposed framework, including draft rules, in June and September 2025.

Under the proposed framework:

• A firm wishing to provide targeted support would need to pre-define the situations in which support would be provided; the relevant consumer segments; and a ready-made suggestion for each segment (eg a suitable action or product).
• Targeted support should be designed to achieve a "better outcome" for consumers receiving it. The ready-made suggestion specified for a consumer segment should be "suitable" for consumers in that segment.
• A ready-made suggestion could not include pension consolidation.
• A ready-made suggestion could include annuity purchase as a means of decumulation, but could not include a particular annuity, an annuity quotation, or signposting or referral to an annuity broker. Additionally, there would have to be a break of at least two weeks after the provision of targeted support was complete, with a firm not permitted to contact the relevant consumer about annuities during the break period.

Consultation outcome

The FCA has now published a policy statement, which sets out its response to comments received through consultation, and includes "near-final" rules.

The framework in its near-final form is much as previously proposed. There are however some modest changes:

• The requisite purpose of targeted support is (now) to put consumers in a "better position", rather than to achieve a "better outcome". The FCA has also clarified that firms do not need to assess the suitability of ready-made suggestions at an individual level.
• As originally proposed, it will not be permissible for a ready-made suggestion to include pension consolidation. The FCA recognises that consumers need help with consolidation decisions (a point made by many consultation respondents), but believes that the appropriate mechanisms are guidance or simplified advice.
• Recognising that annuities "can have an important role to play in retirement", the FCA has backtracked slightly on its previous proposal. As under that proposal, a ready-made suggestion will not be able to include a particular annuity or an annuity quotation. However, there will now be scope for a firm to flag the possibility of referral to a (whole of market) annuity broker, and to refer consumers to such a broker once the targeted support process is complete. There will be no mandatory break period, and payments which a firm may receive for referrals to a broker will be exempted from the general ban on commissions under the targeted support regime.
• There will be an exemption from the FCA's "investment pathway" requirements, such that a firm will not be required to offer pathways to a decumulating consumer who has opted for a ready-made suggestion.
• There are various other small changes, including as to defining consumer segments, the use of assumptions, signposting, labelling, disclosure of charges and ongoing monitoring.

Authorisation

Firms wishing to provide targeted support will need to obtain the requisite permission from the FCA. The Government has confirmed that regulations for the purpose will be laid, so that targeted support can be "rolled out from early April 2026". The FCA plans to open the gateway for applications in March 2026.

Associated issues

Various associated issues are discussed in the policy statement:

• Trust-based schemes. Consultation respondents suggested that trustees might want to provide something similar to targeted support for members of their schemes. The policy statement explores the relevant issues. The key message is that trustees can, within FCA rules, provide support in relation to "in-scheme" options (eg contribution rates or investment choices). Trustees would however need to consider their fiduciary duties and duty of care.
• Guided retirement. Various consultation respondents noted a lack of clarity as between targeted support and the "guided retirement" regime to be introduced under the Pension Schemes Bill. The FCA argues that the two regimes are complementary: targeted support will help consumers who are confident in making their own decumulation choices, while guided retirement will help those who are disengaged. The FCA expects to publish a discussion paper on a guided retirement framework in spring/summer 2026.
• Directing marketing. There are concerns that direct market rules could unduly constrain the provision of targeted support. The FCA and the Information Commissioner's Office have now issued a joint statement which explains how the two regimes will interact. Additionally, the Government has announced that it will regulate "to enable workplace pension providers to deliver targeted support communications to members who have not opted out of direct marketing".
• Redress. The FCA and the Financial Ombudsman Service have issued a joint statement about the handling of complaints as to targeted support. The Financial Ombudsman acknowledges the "many differences" between targeted support and investment advice. The two bodies will work together on matters relating to targeted support, and will engage with relevant firms.

Pension projections and transfers

The FCA published a discussion paper in December 2024 covering possible changes as to pension projections, DC transfers, and due diligence under self-invested personal pension schemes. It has now launched a consultation, with draft rule amendments, on the first two issues. The consultation runs until 12 February 2026. There will be a separate consultation on the SIPP issue in Q1 2026.

Pension projections

The FCA proposes to introduce a new regime for interactive, digital projections (simulations) for in-force contract-based schemes.

Where a firm offers a consumer a simulation, it will be required to present an initial output which meets specified requirements, but then to allow the consumer to interact within at least the following parameters:

• contributions;
• rates of return;
• the point at which benefits are accessed; and
• decumulation options and the ability to choose a type or level of income.

A firm might choose to allow interaction within additional parameters (eg fund strategies or levels of risk), subject to the Consumer Duty. The FCA also plans to allow tools which enable consumers to include other sources of income, subject to safeguards.

Transfers

The FCA wants to ensure that consumers who consolidate their DC pensions (via transfers) do so on a well-informed basis; and that firms handle transfer requests diligently and efficiently.

To that end, the FCA plans to introduce a new regime for non-advised transfers between contract-based schemes. The regime will apply to:

• the firm which provides a consumer's existing scheme (the ceding scheme); and
• the firm which, as provider or distributor, is arranging the potential receiving scheme (the engaging firm).

Under the new regime, engaging firms will be responsible for gathering information from ceding schemes, and then presenting information about both ceding and receiving schemes to consumers in a clear and comparable format. A three-stage process will apply, triggered when an engaging firm becomes aware that a non-advised consumer client is considering a transfer (ie in advance of the point at which the transfer process formally starts):

• Consent: The engaging firm will ask the consumer to identify the ceding schemes, and will obtain his/her consent to information-gathering.
• Information-gathering: The engaging firm will send an information request to the ceding schemes, using a standard template. The ceding schemes will then be required to complete and return the template (except if funds held are below the "small pot" threshold of £1,000). The requisite information will cover benefits and features; costs and charges; and investment risk and performance.
• Information replay: The engaging firm will compile and present the information to the consumer, including a comparison with the receiving scheme. The format of the information replay will not be prescribed, but there will be specific requirements to ensure that information is presented fairly.

The FCA's proposed requirements will not apply to trust-based DC schemes. However, the Government will consider whether similar requirements for trust-based schemes would be "beneficial". The FCA suggests that, in the interim, trust-based schemes might respond to information requests voluntarily.

Charge cap

In a letter to Government about measures to support UK growth, the FCA indicated that it will consult on changes to the pension charge cap, so that "consumers are not disincentivised from investments due to higher performance fees". Further information was included in the December 2025 version of the Regulatory Initiatives Grid.

The plan, it appears, is to introduce a carve-out from the 0.75% charge cap for default arrangements under contract-based schemes, to accommodate suitably-designed performance fees. There is already a carve-out from the corresponding cap under trust-based schemes.

Comment

There is widespread backing for the targeted support regime, in particular as a way of improving outcomes for retiring members under DC schemes. However, the decumulation "big picture" is confusing, with three inter-related policy initiatives moving forward at different speeds: targeted support, guided retirement and retirement CDC.

For many trustees and providers, the priority will be guided retirement. The Pension Schemes Bill provides for the broad framework, but, as the FCA acknowledges, "detailed policy design is still being developed". The industry needs clarity as it works towards the launch of guided retirement in 2027/28.

A key unknown, at present, is whether and how annuities might form part of a scheme's default solution for guided retirement. The FCA has at all stages been clear that firms should not use targeted support to steer consumers towards particular annuities: "the group-based nature of targeted support would be inappropriate for recommending an irreversible lifetime product, which is necessarily personalised". Trustees and providers may, for just those reasons, have reservations about choosing annuities as a default solution, notwithstanding the potential suitability of an annuity for lifetime income purposes.

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