Govt is right on default decumulation, says Steve Webb

Royal London’s Steve Webb says the Government was right to resist calls for default decumulation retirement pathways. The DWP Select Committee today published the Government’s response to the Select Committee’s report on Pension Freedoms. In the report, the Committee recommended that savers should be ‘defaulted’ into particular decumulation ‘pathways’ at retirement, unless they made an active choice - a position the Government rejected. The statement rejecting the plan read: “The Government is, at this stage, not convinced of the merits of default decumulation pathways and is concerned that measures to require individuals to be placed into particular products would be inconsistent with the freedom and choice reforms. “The Pension Freedoms have deliberately moved away from the idea of defaulting individuals into a single product, namely annuities.”The Government said there was “insufficient evidence” to suggest the policy would be suitable for the majority of people at this time. Steve Webb, director of policy at Royal London, said: “The Government is right to reject the idea of a one-size fits all approach at retirement. “The whole point of Pension Freedoms is that everyone is different and has a different pension history and different goals for the future when they reach pension age. “Much more can and should be done to help people make the choice that is right for them, but defaulting them down the route that the provider thinks is best is not the answer”.The DWP response also said that on the pensions dashboard, there was a “strong case for compulsion.” On this, Mr Webb added: “It is very welcome that the Government seems to have accepted the case for participation by pension schemes in the dashboard project to be mandatory. “Without this, people would only be able to see a partial picture of their pensions. “We now urgently need to see the DWP feasibility study so that the project can be driven forward.”

Govt is right on default decumulation, says Steve Webb

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