EV warns of guidance gap in FCA pension plans

February 16, 2026

EV, a financial services technology provider and leader in stochastic modelling since 1993, has welcomed the Financial Conduct Authority’s (FCA) focus on the changing pensions market but warned that a potential two-year delay in implementing updated guidance for pension modellers could leave consumers exposed as Targeted Support is introduced.

As the FCA consultation on the changing pensions market (CP25/39) draws to a close, EV has called for urgent alignment between reforms to guidance modellers and the expected launch of Targeted Support this April. While the firm supports proposals to improve pension projections, it highlighted a significant timing gap, with Targeted Support set to go live months before final regulations for modellers are fully implemented, a process that could take up to 24 months.

According to EV, this delay could result in consumers relying on tools that do not meet the realistic assumptions required under Consumer Duty. The firm argues that such a window creates material risk and may undermine the FCA’s broader objectives.

The company stressed that unrealistic and inconsistent assumptions have long contributed to consumer detriment in pension modelling. In particular, setting Capital Market Assumptions (CMAs), which must account for variable asset returns, currency movements and long-term inflation, requires greater scrutiny than has historically been applied across the industry.

EV is therefore urging that all guidance modellers, whether deterministic or stochastic, have their assumptions reviewed and signed off by suitably qualified independent experts at least annually to reflect evolving market conditions.

Chet Velani, managing director at EV, said, “We can’t ask consumers to make life-changing financial decisions based on inconsistent data. If Targeted Support is to build trust, the tools powering it must be reliable from day one. We believe firms should act now on the consultation’s intent rather than waiting for the final deadline.”

Velani further commented, “This level of rigour is the only path toward solving the misleading results problem that has historically plagued the industry. EV’s experience shows that deterministic projections often struggle to present a realistic picture because they assume a constant level of future returns; notably, they often ignore sequencing risk, which can devastate a retirement plan if poor returns occur in the early years of drawdown.

“A further critical issue lies in the illustration of annuity rates. EV maintains that while using current market rates is appropriate at the point of retirement, using today’s rates to illustrate a purchase decades into the future is inappropriate and potentially misleading. Instead, firms should be encouraged to use realistic future estimates consistent with other economic assumptions.”