Balancing choice and protection will be a key challenge in implementing guided retirement and targeted support, Zedra has said, emphasising the need for product innovation, smarter use of data, and the right mix of digital and human guidance to deliver better outcomes for savers.

Zedra Governance managing director, Kim Nash, warned that too many savers approach retirement with insufficient income and are “left to navigate complex decisions on their own”, emphasising that while members have unique needs, they need confidence that their scheme will support them if they are unsure what to do.

Given this, she said that guided retirement combined with targeted support presents a “real opportunity” to change that.

“By creating simple, relatable pathways and offering a safe default where members do not actively choose, trustees and providers can play a vital role in helping savers achieve more secure and sustainable outcomes,” she said.

However, she warned that "the challenge will be to balance choice and protection".

"Getting this right will require product innovation and investment design, thoughtful use of data to segment members, and a blend of digital and human support," she continued, stressing that trustees will have a "central role" to play in setting the frameworks that make this work.

She also argued that guided retirement and targeted support are “not just about compliance” but “tools to reimagine the retirement journey” and urged trustees, providers and regulators to “seize this moment to collaborate”.

“Together we can build solutions that support members' needs for lifelong income and give members the confidence to plan their retirement with clarity,” she said.

The Financial Conduct Authority (FCA) and The Pensions Regulator (TPR) said that guided retirement and targeted support are complementary initiatives aimed at improving outcomes for scheme members and have called on pension professionals to take proactive steps on guided retirement.

The regulator also said that the introduction of targeted support could change what is available to scheme members.

The FCA announced at the end of last month a further consultation on changes to aid targeted support, emphasising that it wants to help those firms that want to provide targeted support to get ready "quickly".

The FCA also stressed that “full-fat advice” will continue to play an essential role alongside targeted support, emphasising that while targeted support can help close the advice gap, it cannot replace personalised financial guidance.

However, the industry has previously raised concerns about the pace of work for targeted support, particularly proposals to signpost savers to targeted support as soon as possible.

Some have suggested that time should be given to allow targeted support to 'bed in' and become more generally available.

Besides speed, there have been other industry concerns regarding the costs and fees associated with targeted support, as well as the accessibility of members broader pension savings information for firms.

Additionally, regulatory flexibility has also been a point of concern, with one expert calling for the FCA to allow adviser firms, not just pension and investment providers, to apply for the necessary regulatory permissions, with fast-track approval for existing regulated firms. 

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