The Centre for Policy Studies (CPS) has called for savers to be "automatically protected" in retirement by phasing them between drawdown and annuitisation.
Savers should be automatically assigned to a drawdown policy at the private pension age of 55, with a default withdrawal of between 4% and 6%. Remaining assets should be placed in a diversified default fund, the report adds.
At age 80, these savers should then have their remaining pots annuitised, in order to "remove later-life exposure to investment market risks and cost of living inflation".
The proposals were suggested in a paper, published 23 March, which also called for the private pension age to be "swiftly raised" to 60.
Such a policy, which would complement auto-enrolment (AE), seeks to address savers who are "left to wallow in indecision when pondering the complexities of decumulation" at retirement.
It also hopes to reduce exposure to financial risks in later life, such as unsustainably withdrawing savings in early retirement.
The CPS added this would also encourage providers to offer a low cost and diversified default fund with economies of scale.
Report author and CPS research fellow Michael Johnson said this would act as a default and savers would still be able to make their own choices.
"To be clear, everyone should be free to opt out of one or both phases of auto-protection to pursue alternatives, consistent with 2015's liberalisations," he said. "There is no desire to prevent people from doing what they want with their own savings.
"The introduction of auto-protection would address a major policy inconsistency, whereby the state nudges and incentivises people to accumulate retirement savings, only to desert them at the start of decumulation."
The paper follows the CPS' 2010 paper, Simplification is Key, which suggested the abolishment of auto-annuitisation. This was heeded in 2015 by the introduction of Freedom and Choice, although the CPS stated the government had ignored a proviso that this should only take place if "the state and the individual were protected from downside risks".
The proposal received mixed reactions from the industry, with some welcoming the advanced protection it could afford.
Pensions and Lifetime Savings Association (PLSA) deputy director of defined contribution (DC), lifetime savings and research Nigel Peaple, said the proposals deserve "serious consideration" but advice and guidance should also be part of the package.
"Michael Johnson's paper joins a growing consensus that retirees should not just be left to make complex financial decisions without support," he said. "His proposals for a simplified drawdown product on retirement backed up by a default annuity at age 80 deserve serious consideration.
"It will be important to support such an initiative with advice and free guidance. Good consumer outcomes are vital and we need to make sure that the path of least resistance leads to the stable retirement income retirees say they want."
However, some questioned whether the phased approach ignored the fact there is no one-size-fits-all retirement approach.
Dentons Pension Management director of technical services Martin Tilley said the proposal is a "potentially dangerous default".
"For some individuals, the need to annuitise at the point of taking benefits is the correct decision," he said. "A default into even a diversified asset portfolio exposes the individual to risk which may be inappropriate for them.
"I would argue that auto-drawdown is just as risky a concept as auto-annuitisation at age 55. The paper simply proposes changing an individual's default option such that an individual will still need to seek guidance or advice."
Intelligent Pensions head of pathways Andrew Pennie added the proposal fails to recognise the need for a personalised approach.
"There can be no right day to buy an annuity," he said. "Some individuals may need to buy an annuity earlier than 80 and others may not need to buy an annuity at all.
"Pensions are complex and people need better support and advice to make the right decisions. Everybody's retirement will be different and a more personalised approach is necessary if we genuinely want to ‘protect' people and help them achieve the best retirement outcomes."
Johnson ended his paper warning that current contributions to retirement pots were too small, stating that no default approach is likely to last enough time without these being improved.
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