Interactive pension tools and the problem of complex lives

The FCA is proposing to replace the existing pension projections framework for interactive digital tools, which was designed for static illustrations, with a new regime intended to support more flexible and personalised modelling. The aim is to allow providers to reflect different contribution patterns, retirement ages and ways of taking income, rather than presenting a single fixed projection.

The current system does not always fit with how people live and work. Static projections assume a stable working life, continuous pension saving and a predictable transition into retirement. For many people, pension outcomes are shaped by the interaction of multiple life-course factors, including time spent out of paid work due to caring responsibilities, long-term health conditions, part-time employment and insecure work. These patterns are particularly common among women, ethnic minority workers and unpaid carers, and they tend to compound over time.

Interactive tools can allow modelling of breaks in contributions, changes in working patterns, later retirement or phased access to income. They can also make uncertainty more visible, rather than presenting a single “expected” outcome that may feel unrealistic or discouraging to people whose lives have already diverged from the standard model.

There is also an opportunity to help providers identify when a customer may be experiencing vulnerability or disadvantage. Patterns such as prolonged contribution gaps, repeated reductions in saving or early reliance on flexible access could act as signals of caring responsibilities, ill-health or financial strain, supporting earlier signposting to guidance or support rather than relying on consumers to self-identify or seek help.

However, the proposals give firms greater flexibility without going as far as requiring the use of these tools in this way. If interactive tools continue to centre an uninterrupted working life as the default, they may still fail to reassure those who most need to see that alternative paths are possible. If these tools are to support fair outcomes in practice, the challenge for the FCA will be to move from allowing flexibility to setting clearer expectations about how complexity and vulnerability are reflected in pension design.