Consumers shouldn't wait to improve their pension outcomes: Nikhil Rathi

Over the last 12 years, millions have been enrolled in workplace pensions for the first time due to auto-enrolment. Today, 88 per cent of workers have a workplace pension – up from 55 per cent in 2012.

We should recognise auto enrolment for the success it has been. But significant gaps and inadequacies remain.

Much depends on what generation you belong to. One in five single pensioners has no income beyond the state pension and benefits to rely on.

Many retiring in a decade or two did not have access to workplace pensions early in their career and were also shut out of defined benefit pensions – so may well face a shortfall.

And while younger generations have the advantage of auto-enrolment, many feel too stretched with high rents and student loans to prioritise retirement savings.

Half of first-time buyers now take out home loans with terms greater than 30 years – doubling over a decade. Many will not repay their mortgage until they are close to or over 70.

Most of us are still not saving enough or engaging early enough with our pensions’ investments. Whatever the route to improving this and this is challenging as we come through of a cost-of-living squeeze, addressing the adequacy of savings is vital.

The Government is approaching this question through proposed structural reforms, with a consolidation agenda for schemes not delivering value.

The proposed pension pot for life could add simplicity but would also be a profound change to the system and the role of employers.

Pensions is a market marked by inertia, a lack of consumer understanding and ridden by fear.

Most people never switch funds, many do not take timely advice in the years or decades before retirement, and half admit to being totally disengaged when it comes to pensions.

We want to empower and support consumers through our work with the Treasury on the Advice Guidance Boundary Review launched last year.

We want to support the emergence of commercially viable, high-quality models of support for consumers to access through regulated channels.

There is a window of opportunity now, as we reach this generational crossover, to put in a framework fit for the future.

But there is no need for consumers, regulators or industry to wait for the outcome to emerge before taking action to engage consumers.

We can try to save more, receive, seek and impart better support and advice, improve value through transparency and hold a serious conversation about risk. We can check whether products really are value and are in invested in the right areas for savers and the economy.

Later life – for the lucky ones who get there - has a habit of sneaking up on you. Taking action now rather than waiting for a future perfect solution – will ensure those golden years are all the more fulfilling.

Nikhil Rathi is chief executive of the Financial Conduct Authority. This is an edited version of a recent speech.