The Pensions Regulator (TPR) has announced plans to share interim guidance on decumulation "next year", with fuller guidance to be developed over a longer timescale.

Speaking at the launch of the Pensions Policy Institute’s (PPI) research on decumulation, TPR chief executive, Nausicaa Delfas, outlined five principles that she suggested could help “shape the conversation” around a future decumulation framework.

The five principles were: All savers deserve value for money, all savers should be helped with decision-making, schemes should put the saver at the heart of decumulation, the market must innovate to provide genuine choice for savers, and schemes should provide wrap around and personalised support in the lead up to and during decumulation and in post-retirement.

She also confirmed that TPR will be looking to engage with the sector on the development of these five at-retirement principles through a series of virtual roundtables early in the new year.

She stated: “As a regulator we will work with you to support innovation at and post-retirement. Learning from the insight of this report we need to work collectively to promote what innovation in this space looks like, rather than passively waiting until issues arise.

“Our job will be to champion and protect the interests of the saver, bringing their voice to the table by working with charities and other groups who advocate for them.

“We will work to guide and shape the market to enhance the pension system so that over time schemes become full-service providers – accumulation, decumulation and post-retirement support – collaborating with the sector as we do so.

“And allow room for and encourage innovation. And as we begin to appreciate what works, we will provide constructive challenge to the sector to adopt best practices – and ensure that our processes and approach enable innovation in the interests of savers.”

Whilst guidance is expected next year, however, Delfas argued that providers who bring forward their decumulation offers early will get ahead and gain a foothold in the market.

She also confirmed that broader work to support the at-retirement journey is already underway, as TPR is working with the Treasury, Financial Conduct Authority (FCA) and the Department for Work and Pensions to address the barriers faced by schemes in straying into regulated financial advice, or unsolicited marketing activity regulated by the Information Commissioner’s Office, when trying to provide more personalised communications and guidance.

"And we will work with the sector to help minimise situations where savers are faced with messy decumulation because they have several pension pots," she continued.

Delfas acknowledged that decumulation will be a real capacity and capability challenge for some parts of the sector, including single employer trusts.

"But let’s be clear, the long-term expectation is that all schemes should offer decumulation products either directly or through partnerships," she continued.

"Modern workforce pensions that offer accumulation and decumulation. If schemes won’t or cannot make that offer, they will come under pressure to consolidate.

"You should assume that this will become part of the master trust supervision conversation."

"And finally," she added, "we will look to work with partners on further thought leadership and activities which encourages innovation. We are already supporting the exploration of decumulation-only CDC model. And we look forward to the separate PPI report on decumulation CDCs that we are co-sponsoring later this year."

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