In the 2014 Budget the Chancellor gave people more freedom in how they access their pension funds at retirement. Since the pension freedoms came into full effect in 2015, individuals have been able to withdraw their savings at the point of retirement as they wish, subject to their marginal rate of income tax.
Savers in DC schemes are no longer directed towards an annuity, they may access their pot as a lump sum, buy a product that pays an income, keep it invested – or a combination of all three. Pension freedoms offer savers more flexibility and choice, but also more risks to consider. Far fewer people now buy an annuity and far more seem interested in income drawdown. Many have chosen to take cash. There is still much work to do in order to ensure that people manage to negotiate the path from accumulation to decumulation successfully.
The Pensions and Lifetime Savings Association is working hard to promote a regulatory framework for DC pensions that maintains incentives to save, protects schemes from unnecessary costs and ensures good retirement outcomes are delivered for all savers.
One of our policy priorities for 2022 is to campaign for the adoption of our Guided Retirement Income Choices (GRIC) proposals which aim to help members of DC schemes when they draw their pension.