The Department for Work and Pensions intends to introduce a duty on trustees to consider the needs of their members when they want to access their pension pot.
In the government's response to its call for evidence, "Helping Savers Understand their Pension Choices", the DWP identified a need for pension savers to be supported and stated that trustees should deliver ways of developing savers' needs.
The department said that, while there are a number of ways that schemes currently support their members to make the most of their pension pots, the range is not universal.
It explained that its proposals would create a "broad alignment" in the service offers among different providers where every pension scheme would provide decumulation solutions for their members.
The response additionally detailed that, as part of these duties, trustees would either need to offer services - such as organising advice sessions, offering a suite of products and services, or signposting to guidance services - in-house, or partner with another supplier who could provide these services.
However, the DWP acknowledged that an in-house offer of products and services may not be the "optimal outcome" for every member.
Although it said the work it is exploring on communications will enable savers to better understand the value of different services and products available in the decumulation market.
These recommendations resulted from feedback to the initial call which "consistently" reported a need to act to encourage members of most occupational pension schemes to become more engaged with their workplace pensions.
The feedback also revealed a need to support members to make informed choices about how to optimise their later life income and ensure that decisions made at the point of access remain the ones that individuals want to continue with.
Quilter Cheviot technical consultant, David Denton, commented: “A time when the majority of people simply retired and started to access their final salary pension, which would give them an income throughout their retirement without concern it was going to run out, is largely a thing of the past.
Denton went on to explain that, due to pension freedoms and the growing dominance of defined contribution pension schemes, people’s strategies for taking income from their pensions are now of "paramount importance".
He added that it is right the government explore ways to ensure people do not make the kinds of mistakes that land them in poverty in later life.
“Decumulating from a pension can be treacherous, particularly without expert help and savers can easily see their retirement pots run dry before they pass away," he continued.
“The government have not gone as far to propose exactly what products and services should be offered by providers but are intonating a framework to work from to improve the market."
tom.dunstan@ft.com
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