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Transitions to Retirement: Supporting DC members with defaults and choices up to, into, and through retirement
This report builds on the findings of the first report in the series which found particular challenges with levels of financial engagement and numeracy amongst those expected to be the most reliant on their DC savings, suggesting a need for either personalised guidance and advice or robust defaults that can protect consumers from the greatest risks. In turn, this report focuses on the potential for offering default investment and drawdown solutions for accessing retirement income to DC members.
'Supporting DC members with defaults and choices up to, into, and through retirement’, was sponsored by State Street Global Advisors. It draws heavily on new qualitative research with DC savers approaching retirement conducted by Ignition House.The purpose of the qualitative research is to explore preferences for how those approaching retirement might want to draw an income, the trade-offs that they are willing to make in retirement, and the potential to develop default products and strategies that could support them.
The PPI Transitions to Retirement series explores how people access pension savings. The series as a whole is sponsored by Age UK, Fidelity, Partnership, State Street Global Advisors, The Investment Association, The Pensions Advisory Service (TPAS), The Pensions Regulator (TPR) and The People’s Pension.
Chapter one provides an overview of considerations and behavioural evidence around the use of choices and defaults, and the evidence on the impact of defaults that have already existed, at least until recently, in the pensions and retirement system prior to April 2014.
Chapter two shares the findings of new qualitative research with DC savers approaching retirement, which explored in depth their understanding, expectations and preferences around how they might access their pension savings in retirement. It goes on to identify some of the challenges and contradictions presented by these findings.
Chapter three considers some of the contradictions and challenges identified by these findings while the fourth chapter uses the findings to draw some conclusions for the pensions industry from this research.
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