Financial Conduct Authority (FCA) chief executive, Nikhil Rathi, has said the idea that targeted support will not be optimised for every saver is a "necessary trade-off" to improve outcomes, confirming that the FCA is now running a policy sprint to test the plans.

Speaking at the JP Morgan Pensions and Savings Symposium 2025, Rathi argued that "the signals are flashing red" when it comes to pension saving, as only three in 10 DC savers over 45 are confident their pensions will give them the retirement they hope for.

But with increasing contributions substantially "out of the question" or insufficient for many, Rathi encouraged the industry to focus instead on how to improve outcomes through better returns, risk alignment and support.

In particular, Rathi said that the FCA wants its Advice/Guidance Boundary Review to trigger an "advice revolution", confirming that, in partnership with the Treasury, the FCA will consult "shortly" on its proposed new model for targeted support.

"And in the meantime, we are running a policy sprint to test what it might look like in practice," he revealed, announcing that 12 firms have been given until next month to design, build and test the consumer facing element of a cash to equity Targeted Support journey.

Rathi also confirmed that the FCA is working closely with the Financial Ombudsman Service to address concerns that they may treat targeted support as though firms were providing personalised advice.

However, he argued that "that will not happen", emphasising that Targeted Support is "distinct".

Despite this, Rathi argued that some level of risk is needed, admitting that, "in providing suggestions designed for groups, Targeted Support will not be optimised for every individual".

"That’s a necessary trade-off to improve outcomes for as many consumers as possible," he stated.

"Firms should of course always offer good quality propositions, but outcomes will not be even across the board."

But Rathi suggested that broader reforms could also be needed to help make clear that fragmented journeys – treating pensions, mortgages, savings and housing wealth as entirely separate challenges – "must become a thing of the past".

In particular, Rathi queried whether, with the right product design and consumer protections in place, later life lending or allowing withdrawals from a pension to help with a first home, could benefit more people, as part of their financial plan, rather than a last resort.

"Australia, New Zealand, the United States, Singapore and South Africa all permit citizens to leverage their pension savings to buy a first home," he said.

"Some have suggested we consider, carefully, similar approaches in some circumstances here in the UK."

Rathi admitted that there would again be "trade-offs", emphasising the need to consider the ability of savers to replace those withdrawn funds, the impact on house prices, and whether those individuals – and the UK economy – might be better served by investment in a wider range of productive assets.

However, he pointed out that the current UK pensions market assumes high levels of owner-occupation, although research from the Equity Release Council estimates that 39 per cent of current renters believe they will still be renting in retirement.

"Early consideration of how and when someone could access their housing wealth is increasingly important when helping consumers navigate their financial lives," he stated.

"When we open our discussion on the mortgage market shortly, we want to get ahead of this issue, not wait till we have an urgent problem upon us.

"But ultimately, the journey to financial security must start long before retirement – with early, clear, and practical understanding of saving, borrowing, investing and risk."

Rathi concluded: "If we continue to treat pensions, mortgages and savings as separate tracks, we will miss opportunities to help consumers get where they need to be.

"But if we build a network that truly connects, we can get more people on the way to financial security in retirement."

This article originally appeared in our sister publication Pensions Age.

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