Pension savers need more support in navigating the decumulation process to help them make the right decisions, according to Standard Life, with the government and regulators urged to consider three ‘key policy asks’ to help address challenges.

The provider’s ‘Avoid Sleepwalking into Retirement’ whitepaper made recommendations to support the industry, trustees and regulators in pushing for a system that addresses barriers in the lack of decision-making support and suitable income solutions for people at-retirement.

It found that more than two-fifths (41 per cent) of retirees would be at high or medium risk of making poor decisions.

Standard Life argued that, in large part, this was due to regulations preventing pension providers from providing advice, which meant that a “vast majority” of people were left to make retirement decisions on their own.

Furthermore, the provider warned that this issue was going to be exacerbated as people live longer and become more dependent on the state amid a declining working population.

While Standard Life acknowledged there was an advice market, it said that it currently only serves a wealthy subset of the population, and while the Financial Conduct Authority’s (FCA) Investment Pathways were posed as a solution, “they don’t go far enough as they don’t help consumers make good choices about how they will use their money”.

To address the challenge of savers needing more support in navigating decumulation, Standard Life called on the FCA to follow through with plans to create new forms of advice and targeted support to make it more accessible, and allow providers to help their customers better.

It also said it wanted the Department for Work and Pensions (DWP) to follow through with its proposal to create a legal duty on trustees and pension providers to provide or signpost retirement solutions that are appropriate, and find ways to use data to ensure savers are presented with relevant options.

Finally, the provider called for encouragement on product design innovation through the establishment of a framework across the Treasury, FCA, and DWP to help ensure providers can provide the best possible solutions.

The whitepaper stated that recent consultations from the FCA and DWP had signposted a solution: Pre-set retirement strategies alongside targeted support for people to make sure they access the correct strategy.

It argued that these guided defaults would be further enabled by pensions dashboards.

Furthermore, it stated that trustees have a crucial role in ensuring best outcomes for members, and extending their remit alongside available data may permit more personalised defaults to be suggested to members.

“The nature of retirement is changing and it’s now more important than ever that people receive support and guidance to and through retirement,” commented Standard Life managing director individual retirement, Claire Altman.

“While people like the freedom to access their pension at retirement, for many it will either feel like a burden due to the complexity of options, or a process where the chances of a bad outcome are too high. We want to make it easier for us to help our customers get the best outcomes in retirement, provide default retirement solutions that are available through guidance, and innovate so that solutions better suit our customers.

“A vast majority of savers would benefit from financial advice, both in the savings journey and at retirement. Making this more accessible by creating advice models that work for the market is key.

“We support government and regulators in pressing on with plans for providing better help for people and making accessing retirement solutions more straightforward. An appropriate framework for trustees and providers will be necessary to encourage innovation in solutions that meet the needs of the majority, as well as solutions for those who don’t fit the mould of the average saver.

“The chances of securing better outcomes will also be enhanced if providers have access to information such as people’s state pension entitlement and if new rules around simplifying the advice process are enacted.

“With more people saving into a DC pension given the success of auto-enrolment, action needs to be taken now to ensure the right framework exists to support people as they move from saving to accessing their pension.

“We’d like to see a ‘retirement taskforce’ established - an expert working group created to explore these issues and bring about change in overall outcomes for consumers through effective retirement solutions.

“As with most things, there is no one silver bullet but a few key changes now will make a huge difference to the lives of many people as they age.”

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