Clear and considerate communication will be key to helping members make the best choices in the lead up to, and through, their retirement, argues Alastair Hogg of the Society of Pension Professionals.
For many years, the pensions system was designed around careful, long‑term planning. Defined benefit (DB) pensions reflected this approach. They offered people a clear and predictable income in retirement, with few decisions required along the way.
Defined contribution (DC) pensions build on the same idea, but they give people a more active role. Individuals now have greater choice over how they save and how they take an income in later life. That brings opportunity and flexibility, but it also means people need clear information, reassurance and confidence to make informed decisions.
Pensions dashboards will play an important role by helping people see their pension savings together in one place, for the first time. But seeing information is only the first step. Many people will still need support to understand what those figures mean in practice.
When people feel supported and well‑informed, they are more likely to engage with their savings at an earlier stage and plan for the future. Creating better retirement outcomes starts with empowering people to feel confident in shaping their own financial futures.
This is especially true at decumulation, the point at which people begin turning their pension savings into a regular income. As more savers reach retirement with meaningful DC pension pots, supporting people through this phase will play an increasingly important role in determining outcomes.
A major decision at a time of change
Deciding how to take an income in retirement is one of the most important financial decisions people will make. It often comes at a time of transition: careers are ending, priorities may shift, and there is a move from accumulating savings to drawing them down to support everyday life over an uncertain timeframe.
Most people approach these decisions thoughtfully. What they often need is not more complexity, but clearer explanations and reassurance that they are making reasonable choices. Well‑designed default options and accessible support can help people feel guided, rather than left to work things out alone.
“Many people only start engaging fully with their pension later in life: 62% of people say they do not plan to start saving seriously for retirement until they are at least 40.”
Alastair Hogg, SPP
For providers, trustees and policymakers, this means the task ahead goes beyond technical product design or mathematical optimisation. There is an opportunity to take a more holistic approach, recognising how people experience retirement decisions in practice.
Many people only start engaging fully with their pension later in life: 62% of people say they do not plan to start saving seriously for retirement until they are at least 40.
When people do engage, clarity becomes crucial. Research from M&G and the Social Market Foundation shows that, while 73% of full‑time workers have checked their pension in the past year, only 9% are currently saving enough for a comfortable retirement. Early understanding through a Pension Health Check, delivered when people change jobs, allows more scope to make informed choices and build for their future.
Targeted support and well‑designed default decumulation pathways can make a meaningful difference for many people, particularly for those without access to professional financial advice. These solutions work best when they are built around an understanding of the human experience of retirement decision‑making, not just financial theory.
This means shifting the focus from products to outcomes, from pension pots to the income people rely on to live their lives. Clear, empathetic communication is essential.
Balancing certainty and flexibility
A central challenge in retirement income planning is finding the right balance between certainty and flexibility. Guaranteed income options, such as annuities, can provide peace of mind, while more flexible approaches allow people to adapt income over time.
The key is helping people understand the trade‑offs clearly, so they can choose what best fits their circumstances. Increasingly, solutions are emerging that combine flexibility earlier in retirement with greater certainty later on, helping people feel both supported and in control.
Looking ahead, collective DC schemes may also provide an alternative for some groups, offering more stable outcomes through shared risk, while retaining the benefits of collective planning.
It is natural to want reassurance when making long‑term decisions about retirement income. Digital tools have an important role to play, but they work best when backed by clear explanations, thoughtful communication, and human support.
By combining strong financial design with clear, empathetic communication, we can empower individuals to engage confidently with their savings and see retirement as a positive milestone they can look forward to.
Alastair Hogg is a member of the Council of the Society of Pension Professionals.
