The Financial Conduct Authority (FCA) has proposed new measures to prevent savers from missing out on retirement income when they access pension freedoms.

The proposals would require pension providers to offer a range of ready-made investment solutions to customers who do not seek professional advice.

They would also prevent pension investments from being defaulted into cash savings, unless the customer actively chooses this option.

This follows research by the FCA, which found that one in three consumers who have gone into drawdown recently are unaware of where their money is being invested.

Drawdown is a feature offered by some pensions, which allows savers to draw a post-retirement income from the assets held in their pension.

It identified that many people tend to take "the path of least resistance" when entering drawdown, which can often result in poor investment choices.

The FCA estimates the proposed changes could benefit people by up to £25 million a year.

Steve Webb, director of policy at Royal London said:

"These FCA rules are a sensible response to the risk of savers sleepwalking into seeing their hard-earned savings eroded by sitting in low-return cash investments.

"But there is still a problem where people cash out the whole pot and transfer it into a cash ISA or current account.

"It is clear that reckless caution is the big outstanding challenge with pension freedoms."

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