Sackers partner, Helen Ball, has urged the pensions industry to support the Pensions and Lifetime Savings Association’s (PLSA) proposal for greater support for defined contribution (DC) scheme members in decumulation.

In a blog post, Ball stated that although the DC ‘mission’ to help employees save for a pension has been going well with auto-enrolment, it was “about to stall” unless a better way of turning those savings into retirement income was found.

She pointed to the PLSA’s call for evidence on DC decumulation, which noted that pensions were complicated and, as a result, member confusion and disengagement was leading them to giving up on attempting to understand them.

This could not only lead to risks for the member, but also trustees and providers, the PLSA has previously warned.

Ball added that whatever challenges DC members currently face, they could be about to get more complicated for savers with the increase in normal minimum pension age in April 2028 and as more people retire with solely DC benefits.

She stated that it is “time to focus on ideas around a potential solution”, pointing to the PLSA proposal for a new regulatory framework for retirement decisions that covers member engagement and communications, decumulations products, and scheme/governance processes relating to the design and/or selection and ongoing delivery of these elements.

”To date, DWP and TPR’s focus has quite rightly been on DC accumulation due to the small number of schemes that offer decumulation options within the scheme and the relatively young DC population,” Ball commented

“However, as we move towards a time when more people will be relying on their DC benefits in retirement it’s only right that government turns their attention to decumulation.

“We are currently awaiting the call for evidence on DC decumulation from the government which has been promised for this month. It is expected that this will cover investment pathways, something that has been required of contract-based schemes since February 2021.

“We believe, like the PLSA, that this is not enough and that a wider scope is needed to help members turn their savings into retirement income, and that it should cover communications and governance alongside the development of decumulation products.

“Hearts may sink at the thought of another ‘branch’ of DC legislation being developed as we already have quite a complicated set of DC governance rules in place. But pensions are complicated, with many members being confused, disengaged and often making the wrong decisions. As an industry we owe it them to help them make good retirement choices, and we very much look forward to contributing to the debate.”

Share Story: