During May, the Pensions Policy Institute (PPI), sponsored by The Pensions Regulator (TPR), concluded that defined contribution (DC) pension savers – including those in SIPPs, as well as in Workplace Pensions - require more guidance when choosing suitable retirement products.

The PPI’s research report, entitled “Assessing the UK Retirement Income Market”, explored how ‘Value for Money’ (VfM) can be assessed during the decumulation stage of retirement, while acknowledging that individuals entering the decumulation stage, are often making “sub-optimal choices”, such as withdrawing all their pension funds at outset or remaining in pre-retirement investment portfolios during their retirement.

In a press release on 14 May, TPR called for a "retirement sat-nav" to help savers make informed decisions and support better outcomes.

The regulator highlights the need for improved data use, tailored communications, and transparency in post-retirement strategies, while continuing to work closely with both the Department for Work and Pensions (DWP) and the Financial Conduct Authority (FCA), “…to create frameworks that promote innovation, and ensure pension savers are properly supported in navigating complex retirement decisions.” Most notably, this includes working with the FCA on its review of the boundary between advice and guidance entitled “targeted pension support”, as well as the DWP's proposals for what is being termed a “Guided Retirement duty”.

The report, authored by Mariana Garcia Requejo and Melissa Echalier, outlines the following five observations:

1. New forms of support structures are needed for a changing retirement landscape

Since the introduction of the ‘Pension Freedoms’ in 2015, most pension savers opt for drawdown or cash withdrawals over annuities. However, many make decisions without long-term planning, often withdrawing funds unsustainably and without advice. This behaviour is especially common among those with smaller pension funds, making them vulnerable to risks like inflation and longevity. As average pot sizes increase in the future, these risks may become more widespread, unless better support structures are put in place.

2. Default decumulation support structures remain under-developed

While accumulation benefits from defaults like auto-enrolment, decumulation lacks similar frameworks, and many pension arrangements offer no in-scheme income options, leaving members to navigate complex choices alone. Two informal defaults - cashing out or staying in accumulation via drawdown - have become common. Some advocate for accessible, blended default solutions that evolve with savers’ needs, although such models must be carefully designed to accommodate diverse circumstances. This is an area where targeted pension support, and the guided retirement duty could play key roles.

3. Tailored support is limited, because of uncertainties surrounding the advice/guidance boundary

Currently, pension providers are anxious about offering tailored support, due to regulatory fears of being perceived as providing formal advice. As a result, many retirees lack adequate guidance. Pension Wise has limited reach, and formal advice is often seen as unaffordable. The proposed reforms such as the FCA’s targeted pension support and the DWP’s guided pathways aim to bridge this gap, but their implementation may prove inconsistent, and further clarity is needed to assess their effectiveness.

4. A market-level understanding of savers’ needs are hindered, because of data gaps and market fragmentation

Current data often focuses on individual pension funds rather than holistic saver behaviour, particularly for the period following retirement. This fragmented picture limits both policymakers’ and providers’ ability to assess VfM or develop tailored interventions. More comprehensive, integrated data collection is needed to inform policy and improve outcomes, and the forthcoming regulatory initiatives provide an opportunity to strengthen the evidence base.

5. Co-ordinated action surrounding innovation is needed to build momentum and deliver for all savers

Promising innovations include hybrid income strategies, digital tools, and better use of data to tailor retirement support. Providers are exploring solutions that reflect evolving saver needs. However, without co-ordinated efforts from regulators, government, providers, and employers, such innovations risk falling short of delivering widespread improvements in outcomes.

Sponsorship of the PPI Report by TPR demonstrates the importance that they attach to the authors’ proposed solutions, and I believe the Report could act as a catalyst for change, in much the same way as the FCA Consultation Paper on targeted pension support that was released last December has now been followed up with a policy sprint and significant FCA funding.

I understand that the Pension Schemes Bill that was first announced in last September’s State Opening of Parliament is going to be tabled in Parliament before the summer recess and will include more details of the DWP’s Guided Retirement duty.

Given that the shift toward DC pensions and flexible access has made retirement decision-making more complex for pension savers, the PPI Report stresses the importance of balancing innovation with protection, and the need for seamless, guided retirement pathways. A future VfM framework specific to decumulation may be necessary, and the next phase of research will explore whether the existing accumulation framework could be extended, or if a new model is required.

 James Jones-Tinsley is a technical specialist at Barnett Waddingham on SSAS and SIPPs practice areas. He also presents to clients, advisers and other professionals on pension matters, liaising with the media on changes to pension legislation. James D Jones-Tinsley FPMI APFS, This email address is being protected from spambots. You need JavaScript enabled to view it.