Schemes prepare for new retirement duties ahead of Pension Schemes Bill – TPR

Schemes are preparing for a new guided retirement duty, with many reviewing, launching or partnering to provide members with decumulation solutions ahead of the Pension Schemes Bill, a survey from The Pensions Regulator (TPR) found. 

Master trusts all offered decumulation options at retirement. 

Across the rest of the market, 73% of defined contribution schemes did not offer any benefit options at retirement.

Every master trust, along with 98% of both large and medium schemes, supported members with their retirement decisions. 

Nearly a third (31%) of small schemes and 40% of micro schemes offered no support beyond statutory communications.

51% of all schemes aware of the proposed duty started reviewing their decumulation offering. 

As a result, 91% of all members, around 27 million savers, were in schemes reviewing their decumulation options.

Nausicaa Delfas, CEO at TPR, said: “This survey provides positive indications that the upcoming guided retirement duty to provide default retirement solutions is already starting to transform a savings system into a pensions system, as DC schemes ready themselves for the Pension Schemes Bill.

“Many small and micro schemes, however, are currently not doing enough to prepare for the duty, leaving their members to navigate complex choices alone as they transition into retirement. 

“Schemes that struggle to support savers with their retirement decisions should consider consolidation into schemes that can offer value for money solutions that work for different kinds of savers.”

44% of medium and 35% of large schemes had started or planned to consolidate by transferring members into a master trust, compared to 12% of small and 4% of micro schemes.

Delfas added: “As the guided retirement duty takes shape under the Pension Schemes Bill, TPR is working with government and industry to ensure trustees have the clarity and support they need.

“Our new service, TPR Innovation Support, is available to help schemes discuss early stage ideas as they seek to bring new retirement products to market safely and effectively — and we encourage schemes to engage with us.”