Low member engagement is the biggest hurdle to implementing an effective default retirement solution, a poll from XPS Group has suggested, with 37 per cent of participants citing this as the primary challenge.

The webinar survey also highlighted concerns around overstepping the advice guidance boundary (24 per cent), the availability of suitable retirement products (20 per cent), increased governance burden (11 per cent) and lack of member data (9 per cent).

The findings followed a report from the Pensions Policy Institute, which concluded that many pension savers would benefit from more structured defaults that supported sustainable income withdrawals and enhanced value for money (VfM).

It noted that experts agreed that decumulation pathways could help disengaged savers, especially as demand for retirement solutions increases.

XPS Group senior defined contribution (DC) consultant, Gordon Bown, argued that disengagement is the biggest risk in default retirement strategies.

He suggested that trustees and employers must focus on encouraging active decision-making rather than allowing passive choices to persist.

“By implementing smart behavioural nudges, we can reshape the choice architecture and tip the scale from inertia to informed decisions,” he added.

Looking ahead, the 2025 Pension Schemes Bill is expected to change defined contribution (DC) pension schemes significantly.

The anticipated changes include introducing a value for money framework and requiring all trust-based DC schemes to provide retirement products, such as a default retirement income solution.

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