After receiving FCA approval to offer Targeted Support, retirement provider Legal & General said it will focus the new service on customers whose pension savings are fully invested in cash.
The firm said it will now be able to provide more relevant communications to DC workplace members.
L&G said long-term investment in cash can “limit growth and erode value in real terms due to inflation, creating a clear risk to retirement outcomes.” Under Targeted Support, the firm will highlight the risk and provide a practical suggestion empowering workplace pension scheme members to make their own decisions.
It said recent testing of its Targeted Support communications relating to the cash investment use case indicated strong engagement with nine out of 10 customers responding positively. Some 85% of individuals wanted to read the materials, 95% found them easy to understand and 93% were clear on what to do next.
L&G said that suggests that clear and relevant communication, tailored to specific situations can better support members.
Laura Mason, CEO, retail at L&G said: “After a significant period of planning and preparation, securing FCA approval for Targeted Support is an important milestone.
“By integrating these capabilities into our existing tools and propositions, we can move beyond simply presenting options to actively highlighting the most relevant path based on people in similar circumstances.
“This helps narrow down retirement decisions, making them easier to understand and act on, supporting members to build long-term financial confidence with greater clarity.”
Looking ahead, L&G said Targeted Support will be integrated into its new Guided Income solution, which is currently in development.
Guided Income will help members turn their pension savings into a sustainable income in retirement, by combining drawdown in the early years with clear guidance on how much income can be taken each year, including suggested spending ranges to help people stay on track. Over time, it will prompt members when it may be appropriate to consider moving to a more secure income, such as an annuity.
L&G joins a growing number of firms offering Targeted Support to their customers. Mutual provider Royal London launched its Targeted Support ISA service to mobile app customers last month.
Earlier in April it became the first business to receive regulatory permissions to launch a Targeted Support service.
Almost two-thirds of wealth management and financial advice firms (63%) do not currently plan to offer Targeted Support.