Automatic enrolment has brought millions more people into pension saving, but many savers are unlikely to achieve the retirement income they expect. The leading pensions and financial services consultancy’s report details the current state of the UK DC pensions market. The paper explores key themes including contribution adequacy, affordability, retirement support, financial wellbeing, investment strategy, value for money requirements and the growing role of technology in improving member outcomes. The firm warns that in a rapidly changing market, employers and trustees must routinely evaluate their schemes to ensure better retirement outcomes for employees and members.
The UK DC market is shifting, regulatory and policy developments, including the Pensions Commission review, the Value for Money framework, pensions dashboards and guided retirement reforms, are increasing scrutiny of scheme design. This is placing greater emphasis on whether savers are achieving good retirement outcomes. The firm argues that investment strategy, member engagement, retirement support and financial resilience will all play a critical role in helping trustees, employers and providers deliver better, fairer and more sustainable outcomes.
Commenting on the UK DC pensions market, Hannah English, Head of DC Corporate Consulting, Hymans Robertson, said: “It’s an exciting time for the UK DC pension market. We’re seeing innovative solutions from across the industry to tackle some of the most pressing challenges facing savers today.
“Over the past decade, automatic enrolment has transformed pension saving in the UK and successfully brought millions more people into workplace pensions. However, the conversation is now moving beyond participation alone. Employers are increasingly focused on the outcomes members achieve and whether current approaches are delivering adequate retirement incomes across a diverse workforce, and the commercial impact of their businesses if this is not the case. This is driving greater scrutiny of scheme design, contribution structures, retirement support and member engagement.
“At the same time, the market is evolving rapidly. Developments such as pensions dashboards, guided retirement reforms, advances in technology and growing use of AI are creating new opportunities for employers to choose strategies and appoint providers to support members more effectively. We’re also seeing greater recognition that pensions need to be considered alongside wider financial wellbeing challenges, including housing affordability and short-term financial resilience. Employers that take a holistic, long-term approach will be best placed to improve member outcomes while balancing affordability and sustainability.”
Commenting on retirement adequacy, Kathryn Fleming, Head of DC Consulting, Hymans Robertson, said: “Despite more people contributing to their pension than ever before, many face inadequate savings in retirement. This problem has the potential to impact millions of workers, particularly those contributing at minimum automatic enrolment levels and groups who continue to experience poorer pension outcomes, including women, ethnic minority groups and people with disabilities. While automatic enrolment has been a significant success story, participation alone does not guarantee a good standard of living in retirement.
“We also need to recognise that retirement adequacy does not exist in isolation. Many people are balancing competing financial priorities throughout their working lives, including housing costs, childcare, debt repayment and day-to-day living expenses. For some, improving financial resilience or achieving home ownership can be just as important to long-term financial security as increasing pension contributions. This means employers and trustees need to think more broadly about how they support members and help them balance short-term and long-term goals.
“With pensions dashboards on the horizon, it will become clearer for savers to see how prepared they are for retirement and what kind of living standard they can expect. That visibility should help drive engagement, but it will also shine a spotlight on the scale of the adequacy challenge facing many households. Trustees, employers and providers should use this opportunity to help members understand their position, take informed action and access appropriate support. Better retirement outcomes will depend on a combination of effective scheme design, strong investment strategies, meaningful retirement support, financial wellbeing initiatives and a clear focus on delivering long-term value for members.”
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