According to today’s announcements by the Department for Work and Pensions, up to 17 million people working in the private sector who have been contributing towards their pension will be given the option of having an income in their retirement years under new government plans for default pensions being introduced.
Minister of pensions, Torsten Bell, has presented “guided retirement” consultations which have been devised together with the Financial Conduct Authority (FCA) and The Pensions Regulator (TPR). There is another consultation dealing with Retirement Collective Pension Schemes (RCPS) which can be used as a default pension, along with draft regulations.
The plans would bring back income-paying pensions, usually inflation-proof, that would be valid throughout the years of one’s retirement and would not require any complicated financial decisions.
The government claims that most of the private sector Defined Benefit schemes, which used to provide for an inflation-proof income throughout one’s lifetime, have been closed during the last 30 years.
“‘In 2025/26, 46% of all access to pension pots were occasions when the whole amount was withdrawn’,” stated the government. With automatic enrolment, nine out of ten eligible private sector employees are saving into a pension scheme, up from four out of ten in 2012.
Sir Steve Webb, former Pensions Minister, welcomed the “basic concept” while cautioning about the “risk” that lifetime income products could be over-hyped at the risk of maintaining pension freedoms. Quilter’s Jon Greer said default choices should serve “as a safety net, not a straightjacket.” Consultations run from 3 November to 22 December 2026.
