“Not much has changed” in the way in which people approach freedom and choice over the past five years despite "confusion" among defined contribution pension savers, according to State Street Global Investors head of retirement strategy, Alistair Byrne.

Byrne was speaking at a session during the Pensions and Lifetime Savings Association Investment Conference 2021, which covered State Street's and The People’s Pension’s revisiting of their 2015 New Choices Big Decisions research five years down the line.

Byrne commented: “The research back in 2015 looked at how members approaching retirement were engaging with the new choices that they faced. The focus back then was on tax-free cash more than retirement income, and what we found was that the decisions were very challenging, there were high levels of confusion and inertia was very strong. People were not always able to get the advice and the guidance that they wanted.

“In the new research we revisited the issues, how the original participants got on and whether they were happy with their decisions, and examined the new core of people facing retirement today. Are they getting better support and are they happier with their choices? The short answer is, not that much has changed, but there is maybe a bit more focus on retirement income now.”

Byrne added that there was “very little long-term planning” going on and thus argued that there was a strong case for the introduction of more “default income solutions” than were provided by investment pathways.

He stated that the industry and regulators often “assumed a level of rationality and planning” from members when the reality was often more complex than individuals devoting the time to activities, such as shopping around and thinking about the risks they might face.

Lloyds Bank Pension Fund trustee and non-executive director, Michelle Cracknell, said: “One issue is that people don’t have any role models because people never used to have to plan for their retirement.

“You only have to go a few years back to find people that, because they had compulsory retirement ages and were part of defined benefit pension schemes, really didn’t have to do this kind of planning before, at and after their retirement age.

“In my experience people don’t know where to start. If you don’t know where to start with an issue then quite often you never get started at all. The reason is that people find retirement and asking for help quite intimidating. Sometimes people convince themselves that it won’t make a difference anyway.”

The People’s Pension director of policy & external affairs, Philip Brown, added: “The industry providing more guidance and more help seems to be the way forwards to me. This means we need to deliver guidance that actually helps people to face these choices, particularly those with small pots. This can’t just be about people who have large pots that want help.

“I guidance as a way of providing information to people, but also something that points out when they need advice. There are going to be occasions where people have complex situations and what they really need to be doing is talking to an adviser.”

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