More DC savers now have access to in-scheme retirement options
Millions of defined contribution (DC) savers now have access to in-scheme retirement options, signalling a shift from a savings system to a pension system, the latest data from The Pensions Regulator (TPR) reveals.
The watchdog said its analysis of decumulation products within defined contribution (DC) occupational pension schemes, published today (5 March), showed that some 13.4 million members were now offered drawdown at the point of retirement, a product not historically available within occupational schemes.
The analysis comes in advance of the introduction of guided retirement duty in the Pension Schemes Bill.
TPR said larger schemes were "leading the way" in supporting members when they come to retire – noting that some 86% of the largest schemes offer members at least one retirement income option.
In contrast, it said just 46% of small schemes offer members any decumulation product - and two fifths of all schemes offer members none at all.
TPR said the shift towards drawdown being offered in-scheme is largely driven by the growth of master trusts – schemes it said that have the scale and governance to make it a reality.
TPR director of policy Joey Patel said: "These findings herald a transformation in the DC workplace pensions landscape ahead of guided retirement duty, with millions of savers now able to access in-scheme retirement options. This is just the start, however.
"Too many members in smaller schemes are left without support when they reach retirement. This is not good enough.
"We urge trustees to start getting ready for the Pensions Schemes Bill by reviewing their offer and starting to design their decumulation products."
Patel added: "If you are not able to guide savers into the right retirement options for them, our message is clear: you should consider consolidation into a scheme that can offer value for money solutions."
