Trustees are ‘at risk’ if they do not take steps to ensure their members make ‘good’ decumulation decisions, Smart Pension director of policy and communication, Darren Philp, has warned.

Speaking at the PLSA Investment Conference 2022, Philp stated that although trustees “have done a great job on the accumulation side” with improving standards of governance, “quite often trustees think it is ok at decumulation to do the bare minimum, to minimise their risk”.

“I want to flip that on its head. I think you’re at risk if you’re not helping people at retirement. If you’re not finding good decumulation solutions, if you’re not properly providing guidance or signposting to guidance, then members will say ‘why didn’t you help me, why didn’t you support me?'.”

Philp acknowledged the difficulty trustees face navigating the advice/guidance boundary “but I think there is still a lot more that we need to do”.

Also speaking on the panel, PLSA head of DC, master trusts and lifetime savings, Alyshia Harrington-Clark, agreed that “the risk needs to be higher [with trustees] for not doing something than doing something. I strongly believe that we need to be in that place where it’s risky to just leave people”.

A ‘default’ solution at retirement was suggested by Philp, “to make sure people aren’t doing things like taking their tax-free cash and putting the rest of it into a cash ISA”.

As so many people would take the default “you have to be pretty convinced that the default is a good option.” Harrington-Clark warned.

She suggested a ‘soft default, bordering on moderate’, featuring a blend of solutions “that put people in a better place than were they to do nothing” while still giving them the choice to make active decisions if they wish.

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