More than 60% of trust-based schemes do not provide access to a flexible drawdown facility, suggesting a slow response to the April freedoms, according to Willis Towers Watson.
The firm's Pensions Flexibility Study published today found that just 7% of the 222 trust-based schemes surveyed provided flexi-access drawdown within their trust.
The firm said while the number of schemes facilitating flexible access to pots is increasing slowly, many have yet to fully embrace the pension freedoms that were introduced by the chancellor last April.
The majority of schemes (62%) continued to target tax-free cash and annuity purchase as their default option for members. In comparison contract-based providers are offering off-the-shelf defaults, according to 80% of employers in the study. It also showed the majority of contract-based providers have moved towards a blended strategy that aims to accommodate a range of member-retirement choices.
A third (32%) of trustees had allowed member access to a drawdown facility. This was done through linking to a drawdown provider or a choice of providers to which members could transfer their assets at retirement.
Over half (52%) of trustees had made some kind of material change to their scheme design, investment or member communications to support the new pension freedoms.
Nearly three-quarters (71%) of trust-based schemes giving members access to a lump-sum payment permitted one payment without the member having to transfer their savings outside the trust. The proportion of schemes permitting a maximum of two transactions increased from 12% in May 2015 to 19% in October.
Willis Towers Watson senior consultant John Cockerton said: "Drawdown is one of the key ways of putting the new pension freedoms into practice and can be more tax-efficient than cashing out a pension pot in one go.
"In one sense it's concerning to see such limited access to drawdown currently, however many more trustees may be intending to facilitate access to drawdown but are still going through thorough due diligence or waiting to see how the provider market evolves.
"It's fair to say that trustees have had a lot of new regulation to contend with over the past year and, having prioritised implementing new legal requirements, they are now turning their attention to desirable but discretionary options like drawdown. Either way, we would expect to see the trend towards providing drawdown access accelerating in 2016," he added.
Phoenix Group will launch an ESG defined contribution (DC) default solution for pension fund clients of its Standard Life Assurance business and their scheme members.
In the first of a five-part series of articles for PP, pensions minister Guy Opperman sets out how impending legislation will improve pensions for members.
Newton’s Curt Custard considers the investment outlook for 2021 and the implications for DC schemes
Tim Shepherd and Beth Brown look at the legal implications of working from home and how pension professionals can mitigate the risks.
Master trusts’ investment strategies have grown and become more sophisticated over the last three years, but “growing pains” are hindering progress, according to the Defined Contribution Investment Forum (DCIF).