The pension industry’s fear of innovation is leaving many DC members “woefully unprepared” for retirement, according to Hymans Robertson.

A number of experts discussing the future of DC at a Hymans Robertson’s event this week agreed that the pensions sector needed to prioritise developing effective drawdown options alongside suitable, low cost, guidance if individuals are to have sustainable incomes in retirement.

However, Hymans Robertson partner, Lee Hollingworth, said that although there was a desperate need for innovation, the industry was fearful of creating new ways to provide personalised guidance for fear of straying into advice.

“We’re currently in a situation where a fear of providing meaningful support in an affordable way means that many people have none,” he said.

Hollingworth, who chaired a panel debate on the subject at the event, said that there was a great need to provide better support and guidance, particularly at retirement. He mentioned Financial Conduct Authority figures showing that a third of non-advised drawdown sales are being invested in cash funds as an example of the poor decisions that people were making.

One of the most pressing tools that requires development according to Hollingworth, is one that helps people better understand and frame their income in the context of their life expectancy. This is because longevity risk is not being managed in current non-advised drawdown strategies.

“The vast majority of people are underserved and unsupported with the decisions they now have to make at retirement. A huge swathe of the market simply cannot afford to access advice,” he said.

“It’s three years since pension freedoms were introduced and what is offered for drawdown investment remains in the stone-age. Drawdown needs to be seen as a service, not a product and investments should be personalised, and aligned to individual’s goals.”

He argued that the pensions sector needed to find a way to develop low cost tools and guidance that weren’t hampered by heavy regulation. He also called for a cap on the cost of drawdown solutions.

“There is a cap of 0.75 per cent in workplace accumulation. Arguably there is a greater need for this in decumulation as this is when pots are at their largest,” Hollingworth said.

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