Trustees and sponsors are confused about their role in providing members with support on their retirement choices, with the majority shunning the task, a consultancy has warned.
Research by pensions and risk consultancy Hymans Robertson found 95 per cent of pension scheme trustees were concerned about inadequate support for members, yet a mere third saw providing this as their responsibility.
Among the sponsors almost half thought the individual member should take responsibility, while a mere quarter of sponsors saw it as their job to support employees with their pension choices.
The consultancy had interviewed 100 UK pension fund trustees serving on a corporate, non-public sector defined benefit (DB) pension schemes with assets of £50m plus; 46 chief financial officers of companies with 1,000 or more employees; and 31 professional independent trustees in December and January.
It called on the Pensions Regulator to provide greater clarity on where responsibility around this lies.
Ryan Markham, partner and head of member options at Hymans Robertson, said: "There is a deep confusion amongst both trustees and scheme sponsors about whose door this responsibility for education and support on member choices falls.
"This creates apprehension around proactively offering members a clear, unbiased explanation of their retirement choices and access to good support to make an informed decision.
"In light of this, we would welcome a statement from the industry regulator to provide further clarity."
A spokesperson for The Pensions Regulator said: "Our primary concern is that defined benefit scheme members and their advisers have all the information they need to make an informed decision about what is in the members’ best interests. We are working closely with the FCA to achieve this.
"The provision of accurate and timely information from trustees to members and their advisers, and the use of independent regulated financial advice, will enable members to make informed decisions that suit their personal aims and circumstances, working with their regulated financial adviser to do so."
Scheme members are obliged to take regulated financial advice on defined benefit transfers worth more than £30,000.
FTAdviser found ceding and receiving schemes often asked for advice on transfers worth less than that amount, with some even having a blanket advice requirement in place.
Despite this, Hymans warned adopting a passive approach towards members would expose the schemes to risk as members take potentially inappropriate but irreversible decisions.
Taking steps such as improving the communications strategy, making members aware of their choices far earlier in the process, and facilitating quality financial advice could go a long way in mitigating this risk, it added.
Mr Markham said: "Scheme trustees and sponsors need to wake up to the fact that the pensions landscape has changed almost beyond recognition over the last few years.
"Those who fail to support member decision making now risk a mis-selling scandal as big as the high-profile cases of the past.
"The findings of the British Steel case highlight the reality and significance of this risk and the need to support members in a better way."