Low member engagement is the top barrier to getting an effective default retirement solution amongst trustees and employers, according to a XPS Group survey.
XPS conducted a poll during a webinar last week attended by over 185 trustees, employers, and pension managers. It revealed that low member engagement is the biggest hurdle to implementing an effective default retirement solution, with 37 per cent of participants citing it as the primary challenge.
There were also some concerns about overstepping advice boundaries (24 per cent), limited retirement product options (20 per cent), increased governance demands (11 per cent), and poor member data (9 per cent).
These findings come as the 2025 Pension Schemes Bill is set to introduce major changes for defined contribution (DC) schemes. Expected reforms include a Value for Money framework (VfM) and a requirement for all trust-based DC schemes to offer retirement products, such as a default income solution. According to XPS, trustees and sponsors will need to consider how best to support members through these changes.
XPS Group senior DC consultant Gordon Bown says: “The biggest risk in default retirement strategies isn’t the default – it’s disengagement. Trustees and employers must focus on encouraging active decision-making rather than allowing passive choices to persist. By implementing smart behavioural nudges, we can reshape the choice architecture and tip the scale from inertia to informed decisions.”
