The Pensions and Lifetime Savings Association (PLSA) has called for the introduction of a new regulatory framework around defined contribution (DC) decumulation and outlined its vision for what it may look like.

Following a three-month consultation, the PLSA has published its recommended framework to help pension schemes support their members’ retirement decision-making.

The association called for a statutory requirement for pension schemes to support their members when they are making decisions about how to access their pension savings.

Its framework also outlines a set of minimum standards for communication and engagement with savers, alongside product design and governance.

“The pension freedoms radically revised the journey for savers when they reached retirement, bringing new opportunities, challenges and risks to savers and pension schemes,” commented PLSA Policy Board chair, Emma Douglas.

“The decumulation framework we are recommending today responds to the evolution of the pension system. It will provide vital support to savers and help bridge the gap between the inertia which makes automatic enrolment such a success, and the range of choices (which can be confusing) savers face when electing how to draw their pension at retirement.”

The PLSA’s framework aims to provide more support to unengaged savers whilst supporting freedom and choice for those more engaged, and to facilitate and influence future product development with a view to managing the risks for savers as DC pots and savers’ dependency on them increase.

It also hopes to utilise the benefits of scale and mechanisms, such as trust-based fiduciary duty in master trusts, support similar saver experiences while also enabling innovation, and mitigate or help manage risks faced by savers and pension schemes.

PLSA head of DC, master trusts and lifetime saving, Lizzy Holliday, added: “We are extremely grateful for the quality of responses and engagement during the consultation period. The input and views have reflected the breadth of our membership, wider industry and consumer representatives. The clarity of focus on the saver has been prominent throughout.

“Driven by our mission to help everyone achieve a better income in retirement, our recommended framework is designed to provide pension schemes with the certainty to better support savers with their at-retirement decisions and seeks to place savers at the heart of at-retirement policy and delivery.”

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