Pensions - Articles - Outcome of consultation on pensions decumulation


Kathryn Fleming, Partner, Hymans Robertson comments on the outcome of the Government’s consultation on pensions decumulation.

 “It is good to see additional duties being placed on pension trustees to ensure decumulation options are in place for scheme members. They are well placed, we believe, to make decisions that reflect the wants and needs of their memberships. We agree with the overall aim for every pension scheme to either directly or through a partnering arrangement provide decumulation solutions for their members.

 This will act to improve member’s financial outcomes. Therefore, we believe that all trust-based schemes should be required to provide a solution to support a member in accessing the full range of the pension freedoms. However, it is imperative that this is not just product driven, but it is delivered in a way that best meets the needs of the members. It needs to be delivered in conjunction with a support service that helps a member better understand their retirement goals. What’s also clear is the lack of consensus across the pensions industry that the new product should be CDC.

 We believe that pension and product providers should have the freedom to design a solution that best meets the needs of their members, of which CDC is only one solution. While we welcome the Government’s acknowledgement that CDC will not be a solution for all, but it will have a role, we are disappointed to see its continued focus on it as the primary decumulation option.

 In doing this the Government is missing an opportunity to push the industry to innovate in this area. It also needs to be approached with caution as there is a broader conversation to be had regarding the extent to which irreversible solutions will have a place in default decumulation.”

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