The Pensions Administration Standards Association has issued guidance to help trustees, administrators and providers assets their operational readiness for default pensions or 'guided retirement'. 

Guided retirement is set to relieve savers of some of the decision-making burden at retirement, as many have been found to make decisions that could result in poor outcomes since pension freedoms became available in 2015. 

The timeline to guided retirement now includes a planned Industry Delivery Group and Member Interests Group, with government and Financial Conduct Authority consultations on policy proposals planned for this autumn, followed by consultations on regulations and rules in the second half of 2027, with regulations made in H2 2028 after a regulator consultation. The regulations are expected to come into force in the second half of 2029. 

PASA has now published guidance to help schemes assess if they are ready for the new requirements. It said that rather than attempting to prescribe a final solution while the policy framework is still evolving, the guidance sets out the practical questions schemes can start asking now, and includes a 'readiness checklist'. 

Schemes and administrators might need to make changes, the group stressed, such as greater workflow automation, stronger system integration and data flows, clear accountability across the organisations involved, appropriate controls around automated decisions, and communications and support which extend across the full retirement journey.  

“Whatever the final framework looks like, it will ultimately have to work operationally for administrators and, most importantly, for members. That means understanding whether systems can support the journey at scale, whether the right data is available, who is responsible for what, how members will be supported and how retirement income will actually be paid reliably," said Jess Rigby, who chairs PASA’s DC Working Group. 

“We don’t think schemes need to have all the answers today. But there’s a great deal they can sensibly do now to understand their starting point, identify gaps and dependencies and make sure administration is involved early enough in the design process,” she added. 

Preparing for the new framework could require schemes and administrators to redesign processes, upgrade technology, improve or collect additional data, train teams and establish new governance arrangements, noted PASA. 

PASA chair David Fairs said starting now will put schemes in stronger position as the framework develops.  

“The additional implementation time for Guided Retirement is welcome, but it shouldn’t be confused with a reason to wait. Administration needs to be part of this conversation from the outset. Decisions about default pensions and member journeys have consequences for systems, data, people, processes and ultimately the experience members receive," he said.