The pensions industry has been urged to work together to address issues around defined contribution (DC) pensions, after research from Redington highlighted the complexities currently faced by DC savers nearing and in retirement.

The report noted that increased life expectancies have contributed to the slow demise of defined benefit (DB) pension schemes, with 2013 having seen the percentage of employees invested in DC pensions overtake those in DB pensions, also predicting that this trend is likely to continue.

However, Redington warned that this trend will result in more uncertainty and responsibility for the retiree, arguing that the real-world implications of the ‘pension freedoms’ reforms are now starting to be felt.

In light of this, it argued that there is a "real need" for the pensions industry to work together to support DC members in making a number of "very complicated" decisions and collaborating on the best ways to provide sustainable income in later life.

Redington’s Future of Retirement Income Report outlined seven specific areas of debate around retirement income, as well as the steps needed to achieve better outcomes in retirement for DC members moving forward.

For instance, in relation to communications concerns, pension scheme trustees were encouraged to consider how they can make communications more accessible, and to innovate the way retirement is structured so pensioners don’t have to think about their pension later in life.

The key areas outlined alongside member communication were investment strategy, from both a consultant and asset management perspective, regulation, advice and guidance, product innovation, and technology.

Commenting on the report, Redington head of DC and financial wellbeing, Jonathan Parker, stated: “The world is in a very different place to when the Old Age Pensions Bill was launched in 1908.

“DC is now the norm, and has triggered a clear and steady shift in responsibility for saving, with individuals now bearing the brunt of the risk. “The real-world implications of the ‘pension freedoms’ are now starting to be felt, leaving many members confused and potentially very vulnerable.

“If we are to help minimise the chances of people sleepwalking into poor outcomes in retirement, then they're going to need more support.

“It is by no means all doom and gloom: new and evolving technology, such as open finance and pensions dashboard, has the potential to revolutionise the way we can interact with our pensions, and the ‘in retirement’ investment space is ripe for innovation.

“However, there is still some way to go and so our goal is to engage with the industry and spark change, as we look to deliver on our mission to help make 100 million people financially secure – for the benefit of people and the planet.

“In launching this report, we hope to inspire others from across the industry to join the conversation so we can begin driving forward practical, achievable solutions to support members in their decision-making and ultimately secure themselves a sustainable income in later life.”

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