Implications for members

When the new system is in place, the government will not prescribe a particular product which people are required to purchase or invest in when accessing their savings. It will be up to individuals to decide how they want to access them, either as a lump sum or through some sort of financial product. The government says it recognises that increasing the flexibility and choice available to those with defined contribution pension savings “may increase the risk that people fall back on means-tested benefits later in life”.

But it sees the change as justified by the fact that people are living longer and their needs in retirement are becoming more varied, coupled with evidence that some consumers have been getting a “poor deal” from annuities (see page 66).