In today’s ageing society, retirement planning and the way pension schemes and government support savers with it, encompasses more than just saving money.
Two in five people now have a mortgage past the state pension age. Around 8.4 million people live alone in the UK which makes up a staggering 30% of all households (based on a 2023 Office for National Statistics study). As the population ages, more of our lifespans will be impacted by illness too.
But why is this important? It shows that members need to think about their wider needs at retirement when they convert their savings and investments into a retirement income (known as decumulation). Members should be asking themselves:
- Do I have rent or a mortgage to pay in retirement?
- Will I be living alone or sharing bills?
- How is my current health, and what are the likely future needs?
Providers should be supporting members in thinking through these questions and guiding them to the decumulation options best suited to their needs.
Care and support
Although financial stability is important when preparing for the future, other factors such as guidance and care should be considered. Looking at Oscar-winning actor Gene Hackman and wife Betsy Arakawa helps us understand the importance of support in later life. Betsy was the sole caregiver to husband Gene, who suffered from Alzheimer’s disease. When Betsy died, and with no other support, Gene died a week later.
This reminds us that having money in retirement isn’t enough on its own. In later life, care and support are also crucial.
Helping members visualise their retirement
Helping members plan for retirement and how they’ll decumulate goes hand in hand with educating them on what retirement can look like. Typically, a person’s retirement has four main stages of expenditure:
- Active years – for hobbies and travel
- Health needs – managing personal health or supporting a partner/family member
- Slowing down / ageing in place – reduced activity, more time at home
- Advanced support or residential care
Making sure members know the standard of living they want to achieve during each stage, and how much money they’ll need for it, is important. Stage 4 especially needs careful financial and administrative planning.
Members may be surprised to know the PLSA Retirement Living Standards suggests a single person will need £14,400 each year as a minimum income, £31,300 for a moderate standard of living and £43,100 to be comfortable. For couples, the equivalent numbers are £22,400, £43,100 and £59,000 each year.
The Government’s role
The 2025 Pension Schemes Bill introduced landmark reforms designed to modernise the UK pension landscape and improve outcomes for savers. Key changes include the automatic consolidation of small pension pots, helping reduce fragmentation and lost savings, and a new Value for Money (VFM) framework to ensure schemes deliver strong returns at fair costs. These reforms apply across the board—from large defined benefit (DB) schemes to smaller defined contribution (DC) pots built up through automatic enrolment. Together, they mark a major step forward in making pensions work better for members.
The government has also confirmed that work is progressing on enabling collective defined contribution (CDC) as a decumulation-only option. This would allow members to transfer their DC pots into a CDC scheme at retirement, pooling longevity and investment risk. This is expected to improve member outcomes.
Alongside the Bill, the upcoming Pension Adequacy Review will assess how well the UK system supports people in retirement. This review will help policymakers identify income gaps, support citizens in understanding their retirement prospects, and EU institutions to coordinate reforms while respecting national systems. This can help boost retirement outcomes, create more efficient schemes and encourage stronger regulation.
Looking to the future
As the pensions landscape evolves and society continues to age, it’s clear that pension providers must step up in how they design and deliver decumulation support. The current regulatory framework limits the guidance providers can offer, but for members to make informed decisions, the government must enable more meaningful, personalised support.
Employers are likely to remain a trusted source of financial guidance, especially for those who feel overwhelmed by complex retirement choices. As an industry, we need to shift our focus—from simply helping people save, to helping them navigate their future holistically, with tools, pathways, and support that reflect the realities of modern retirement.
Please note that this article was originally delivered as a talk for Professional Pensions Live. If you’d like to learn more about the pension scheme’s role in supporting members with decumulation you can speak to Azka, or get in touch
