The Pensions Regulator (TPR) has warned that many DC savers, especially renters and those without other savings, lack clear retirement plans and guidance, urging trustees to review decumulation strategies.
In a blog post, interim director of pensions reform Patrick Coyne urged trustees to review their decumulation strategies now to improve outcomes.
Coyne highlighted that while eight in 10 employees now save into a pension, many savers lack clear plans for accessing their funds.
Data from the Department for Work and Pensions (DWP) shows only 22 per cent of DC savers who had not yet accessed their pension had a plan, while 56 per cent knew they had a choice but lacked clarity.
Research from the Pension Policy Institute, sponsored by TPR, found that over 70 per cent of people fully withdrawing DC savings did so without professional advice and more than half of first-time accessed pots were taken as cash.
Coyne notes: “It is becoming clear that millions of people saving into DC pensions need and want more help and support at retirement.”
Coyne also notes that awareness of guidance services is low. Just 30 per cent of people aged 40–75 have heard of Pension Wise, and only 9 per cent know about Money Helper. He suggested trustees could do more to signpost these services and prepare for changes such as pensions dashboards and the Pension Schemes Bill which introduces guided retirement duties.
He calls on schemes to embrace innovation. He says: “Our innovation service offers early regulatory guidance to help schemes develop flexible, user-friendly retirement products that reflect the diverse needs of savers. This is your chance to shape how guidance is delivered in practice.”
He urged trustees to engage with members, promote trusted guidance, and prepare for a more engaged membership to ensure savings deliver security and choice in retirement.
He adds: “We’ve done the hard work of getting people saving. Now we must make sure it’s worth it. Trustees must see themselves not just as stewards of assets, but as enablers of good retirement outcomes.
“We risk a generation retiring with too little and too few options. This is the challenge of our time. Trustees must act now.”
