During an XPS Group webinar on 8 May 2025, attended by over 185 trustees, employers, and pension managers, a poll revealed that low member engagement is the biggest hurdle to implementing an effective default retirement solution, with 37% of participants citing it as the primary challenge.
Whilst there were concerns around overstepping the advice guidance boundary (24%), the availability of suitable retirement products (20%), increased governance burden (11%) and lack of member data (9%), the audience overwhelmingly identified low member engagement as the key challenge.
Commenting on the poll’s results, Gordon Bown, Senior DC consultant at XPS Group, said: “The biggest risk in default retirement strategies isn’t the default - it’s disengagement. Trustees and employers must focus on encouraging active decision-making rather than allowing passive choices to persist. By implementing smart behavioural nudges, we can reshape the choice architecture and tip the scale from inertia to informed decisions.”
The findings come at a crucial time, as the 2025 Pension Schemes Bill is expected to bring significant changes for defined contribution (DC) pension schemes. Among the anticipated changes are the introduction of a Value for Money framework and the requirement for all trust-based DC schemes to provide retirement products, such as a default retirement income solution. These reforms raise important considerations for sponsors and trustees. Supporting members with effective solutions remains key.
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