Pension holders value flexibility and control over their pension savings, but often feel overwhelmed by complexity, technical language, and the fear of 'getting it wrong', research from Standard Life has revealed.

The report, Decisions in the dark: How the defined contribution pioneer generation are navigating retirement income decisions, explored how individuals experienced decumulation and the psychological biases that shaped their choices.

It found that experiences of retirement decision-making were highly varied and deeply emotional, underscoring the difficulty of designing solutions that worked for everyone.

The study suggested this created both a challenge and an opportunity for policymakers, providers, and trustees as they seek to deliver targeted support and guided retirement pathways that provide reassurance and simplicity without removing individual autonomy.

Interviews examined attitudes to risk, levels of financial confidence, family circumstances, and working patterns, with follow-up conversations - including joint interviews with partners - used to capture how household dynamics influenced decision-making.

These revealed that the transition from a regular wage to pension income was often accompanied by anxiety and uncertainty, particularly among those with lower financial confidence.

External pressures, such as the rising cost of living and political uncertainty, were found to drive a strong preference for security, even when this may not yield the best long-term financial outcome.

Indeed, a near-universal theme was the desire to “clear the decks” before retirement, most commonly by paying off outstanding debts.

The research also found that the 25 per cent tax-free lump sum was widely viewed as a reward after a lifetime of saving and was rarely taken without a clear purpose, most often to repay a mortgage.

Taking the lump sum frequently contributed to a feeling of being psychologically “ready” for retirement.

While flexibility and control remained highly valued, many participants described the decision-making process as daunting, with emotional factors such as loss aversion, fear of boredom and decision paralysis often leading to procrastination or piecemeal choices.

The report also noted that today’s 55-70-year-olds were "pioneers" of a new retirement model shaped by the shift from defined benefit (DB) to defined contribution (DC) provision, where retirement was no longer a single event but an extended period of complex decisions.

Commenting on the findings, Standard Life Centre for the Future of Retirement director, Catherine Foot, said deciding how to draw an income from a pension pot is one of the most significant - and challenging - financial decisions people will make.

“Our research shows that people want simplicity and certainty, but they also want control," she stated.

"The challenge - and opportunity - is for the financial services industry to provide more personalised, timely support that helps individuals navigate complexity without feeling locked in."

Foot stressed that there was not a single path through this journey, nor a single decision that would set someone on the ‘right’ course for their whole retirement, adding that managing money into and through retirement was more like "a series of stepping stones."

"This pioneering generation is clear that they want practical, simple support that reflects the messy reality of these decisions and gives them greater confidence at each stage," she added.

The report concluded that there was no one-size-fits-all solution, and that advice, targeted support, and guided retirement would need to adapt to differing needs and confidence levels.

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