Most DC members are now in schemes reviewing their at-retirement options as providers prepare for the new guided retirement duty, according to The Pensions Regulator’s latest survey.
The research shows that 91 per cent of DC savers, around 27 million people, are in schemes taking steps to enhance decumulation options ahead of the proposed legal requirement in the forthcoming Pensions Schemes Bill.
While all master trusts now offer at-retirement solutions, gaps remain across the wider market as around 73 per cent of other DC schemes still providing no benefit options at retirement.
Member support varies, with all master trusts and most large and medium schemes offering guidance, compared with just 69 per cent of small schemes and 60 per cent of micro schemes.
The proposed duty is already prompting action, with just over half, or 51 per cent, of schemes aware of the legislation starting to review their offerings. As a result of this activity and the proactive steps taken by master trusts, the vast majority of savers are now in schemes that improve their decumulation options.
At the same time, consolidation continues to gather pace, with 44 per cent of medium and 35 per cent of large schemes either transferring members into a master trust or planning to do so, compared with just 12 per cent of small and 4 per cent of micro schemes.
The survey of 200 DC scheme representatives also looked at other key areas, including value for money, administration standards and protection against pension scams.
TPR chief executive officer Nausicaa Delfas says: “This survey provides positive indications that the upcoming guided retirement duty to provide default retirement solutions is already starting to transform a savings system into a pensions system, as DC schemes ready themselves for the Pension Schemes Bill.
“Many small and micro schemes, however, are currently not doing enough to prepare for the duty, leaving their members to navigate complex choices alone as they transition into retirement. Schemes that struggle to support savers with their retirement decisions should consider consolidation into schemes that can offer value for money solutions that work for different kinds of savers.”
Delfas adds: “As the guided retirement duty takes shape under the Pension Schemes Bill, TPR is working with government and industry to ensure trustees have the clarity and support they need.
“Our new service, TPR Innovation Support, is available to help schemes discuss early stage ideas as they seek to bring new retirement products to market safely and effectively, and we encourage schemes to engage with us.”