July 18, 2023

Decumulation in DC pension schemes – proposed new trustee duties


The government is consulting on a proposed framework to support members of DC occupational pension schemes in their decumulation choices i.e. their choices on how they will access their benefits.

Under the proposed framework, trustees of DC schemes would be required to offer a decumulation solution, or set of solutions, which are suitable for their members in general and consistent with the pensions freedoms. When they come to access their benefits, members would have the option to either choose the (or one of the) default solutions offered by the scheme or to access their benefits in one of the other manners permitted under the pension freedoms by transferring to another scheme. Trustees would either need to offer their chosen solution(s) in-house, or partner with another supplier who could provide them.

The government is not proposing to require trustees to offer specific products or services. However, it will encourage schemes to include access to a collective DC (CDC) scheme as part of their offering and intends to create a CDC decumulation market to support this approach. The government expects trustees to develop their offering, and to guide members towards that offering, based on the following questions:

  • Does the member only want a regular income?
  • Does the member only want flexible access to their pension benefits?
  • Does the member want a combination of both?
  • Does the member want to do something else?

The government will legislate for the framework when parliamentary time allows. However, as the government wants to see members being offered this type of decumulation support sooner rather than later, it will work with The Pensions Regulator to issue guidance for trustees that demonstrates how trustees can offer this support without being required to do so by legislation.

The consultation closes on 5 September 2023.

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