Consultations on guided retirement and regulations for retirement collective defined contribution schemes have been published by the Department for Work and Pensions and regulators today as the government says the next step after auto-enrolment is "a default pension for life". 

The consultations contain proposals of how default pensions, including RCDC, should be designed and delivered, how schemes should support members approaching retirement, and how to keep the framework practical. 

Pensions minister Torsten Bell will formally announce them this afternoon at the Association of British Insurers' Long-Term Savings Conference. The guided retirement consultation will be run jointly with the Financial Conduct Authority and the Pensions Regulator and close on 22 December. The government has also published its response to the policy consultation on RCDC today. 

"Private sector workers deserve a much better deal when it comes to pensions. They are doing the right thing and saving for retirement, but when they get there too many are left without a genuine pension," said Bell.   

"We are resurrecting proper pensions for private sectors workers, guaranteeing them the option of an income that last throughout retirement and in many cases protection against the rising cost of living – things public sector workers take for granted. We are going to give pensions back to the people who are working hard and saving for their retirement,” he added.  

The regulations for RCDC will allow pension funds to provide this to members as a default pension benefit solution. A new requirement to default or 'guide' members towards a decumulation route will apply to master trusts and group personal pensions in the second half of 2029, and to single trusts in 2030. The Pension Schemes Act 2026 specifies that the default pension needs to be designed "to provide a regular income during retirement".

The government stressed that the new option of RCDC will help close the pension gap between public and 17m private sector workers, saying that savers will have the option of a stable income for the rest of their lives without having to become investment experts overnight. It said this change is needed given that in 2025-26, about 46% of DC pots accessed for the first time were fully withdrawn.  

“People should not have to navigate complex pension decisions alone. Guided retirement will offer a simpler way to turn savings into income, regardless of which workplace pension people have," said Therese Chambers, executive director at the Financial Conduct Authority. 

TPR executive director of strategy, policy and analysis, Richard Knox, said: “People need more help to turn a pension pot into a sustainable retirement income, and well-designed default options at retirement will help people navigate these complex and important financial decisions. Schemes should engage with DWP's consultation on guided retirement and help make these reforms a success.”

Madalena Cain, deputy chair of the Society of Pension Professionals’ DC Committee and a member of the DWP's Guided Retirement Delivery Group, was pleased that the government has already engaged with the pensions industry on guided retirement.  

 

"The consultation launched today is the next step in that engagement process and ensures that everyone has an opportunity to highlight potential challenges, offer solutions and help ensure DC pension savers can convert their savings into a sustainable retirement income without having to make complex financial decisions at and throughout retirement,” Cain said. 

 

Others welcomed the detail on the policies but stressed the complex nature of decumulation. Director of policy at master trust Smart Pension, Joe Dabrowski, said: “Defaults made auto-enrolment work and we support them at retirement too, but designing a default for retirement is much harder than designing one for saving. If we get the design wrong, we will get the outcome wrong. Our research shows that people’s approach to later life is changing dramatically, so solutions must be built around how retirement is changing. We look forward to responding to the detail of the proposals.”

Stewart Patterson, head of innovation at WTW's master trust LifeSight argued that RCDC and guided retirement could reshape pensions in the way auto-enrolment has. 

  

"Most people want a reliable income throughout retirement, not a series of difficult financial decisions. Retirement CDC can help meet that need by providing an income for life without placing the ongoing burden of investment and withdrawal decisions on individuals," he said. 

 

LifeSight plans to launch an RCDC scheme once the regulatory framework is in place