The Department for Work and Pensions (DWP) is expected to announce DC schemes’ requirements to provide a decumulation product for members in its response to its Helping savers understand their pension choices call for evidence last year.

According to DWP head of collective defined contribution (CDC) and decumulation policy, Julian Barker, the response will “likely be saying is that we would want to place duties on trustees to consider the needs of their members at the point of accessing their pension. That would mean that, whilst we would not be prescriptive, we would require schemes to provide some sort of product for members to expect to get at the end of their DC accumulation journey”.

The call for evidence found that that “there is a real inconsistency across the private pensions system in terms of the level of support products offered to members in trust-based schemes… which can lead to confusion and disengagement”, he said.

Speaking at the PLSA Investment Conference, Barker stated that “whilst we don’t expect schemes to necessarily provide that themselves, we would expect them to partner up and do other things to make sure that while the member is in accumulation, they have got a pathway and communication journey towards what’s expected”.

This will not be a default, he explained, “as we want members still to have choices because we recognise that no one pension scheme solution could fit everybody, but we do think it is important to ensure that members have at least some sort of expectation”.

Barker added that the Pensions Minister, Laura Trott, is “very keen that, in time, that duty to provide products would mean that amongst the products available to members, it is important to have a CDC product”.

According to Barker, the pension choices response will be published in the summer and “we will also be consulting on the proposals that come out of that”. The DWP’s response to its consultation earlier this year on extending CDC pension schemes to accommodate multi-employer schemes, and to look at the potential of CDC as a decumulation-only option, will also be published this summer, he added.

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