How to solve ‘unfinished business’ in DC

Pension scheme members understand more about savings and retirement options than they did two years ago – but there is still a big gap to bridge, according to research from TPT Retirement Solutions.

The percentage of members who feel that they understand the choices and options they have for accessing their pension rose from 45% in 2024 to 53% in 2026. More members are also aware of where they can turn to for support: awareness of services like Pension Wise and MoneyHelper rose from 50% to 57% over the same period.

In other encouraging news, more members understand the pension outcomes they are working towards. Just over half of members (52%) now understand what their pension savings are likely to be worth at retirement, compared to 47% in 2024.

Much further to go

While there has been progress, members are still uncertain about many aspects of pensions. Over half – 52% - said they did not have enough information to understand and make decisions about their retirement. In addition, 58% said they do not know how much to save to achieve the retirement lifestyle they want.

Georgie Edwards, head of DC at TPT Retirement Solutions, said: “It is encouraging that members’ understanding of savings and retirement options is improving, but there is still work to be done. Our research reveals gaps in knowledge and support which the industry should target with improved education throughout the savings journey.

“Education must come alongside more effective solutions and tools that help remove the unnecessary burden placed on savers. The industry has an obligation to facilitate a smoother, more confident bridge from working life into retirement, helping members make informed decisions and ultimately achieve better pensions outcomes.”

Ask the right questions

Edwards’ comments chime with the views of Emma Douglas, the chair of the Pensions Regulator. “At TPR, our starting point is that today the pension system is unfinished business,” she said in a speech at law firm Sackers’ conference earlier this week, highlighting the 15 million people who are under-saving, and 43% of working age people who are not on track for a secure retirement.

Douglas added: “Our strategic objective – more people on track for a secure retirement – means well-structured default pensions that provide better value for members. It also means trustees asking the right questions. Housing, health, family circumstances and other sources of wealth can all influence which default pensions are likely to work best for different groups of members.

She finished: “Understanding these factors can help trustees design default pensions that are better suited to the needs of their members.”