The U.K. Department for Work and Pensions (DWP) said it is consulting on how workplace schemes should provide default retirement income, a change it estimates could affect around 17 million private sector workers.
The Nov. 3 announcement concerns implementation of a duty already established by the Pension Schemes Act 2026. Covered schemes must design a default benefit intended to make regular payments during retirement, while members remain free to use their savings another way. Future regulations may exempt some members, including those with small pension pots, from the regular-income requirement.
DWP is seeking views on its Guided Retirement approach and on rules for retirement collective defined contribution schemes. The policy addresses a choice many savers face when they retire: a defined contribution pension builds a pot through contributions and investment returns, but the member must decide how to draw money from it. The new duty places more responsibility for designing an income route on pension schemes.
Financial Conduct Authority (FCA) data show that 45.8% of pension plans accessed for the first time in the year ending March 31, 2026, were withdrawn in full, down from 47.4% the previous year. Those figures count plans, rather than individual savers.
A collective arrangement could combine members’ savings to support payments for life. The payment amount is not guaranteed: it can fall as investment results and the scheme’s finances change. Members would therefore retain some risk even if a scheme provides an income route for them.
An earlier DWP roadmap tentatively placed the start of the duty for master trusts and FCA-regulated workplace schemes in July through September 2029. It placed single-employer trusts and schemes with collective retirement defaults in July through September 2030. Both windows depend on further implementation decisions.
DWP said the Guided Retirement consultation is scheduled to close Dec. 22.
