Ministers propose default lifetime pensions for 17 million private-sector savers
Around 17 million private-sector workers saving into defined-contribution pensions would be offered a default income for life under “guided retirement” plans launched by Torsten Bell, the pensions minister. Schemes would have to provide the default as savers approach retirement, though members could still choose otherwise. “We are resurrecting proper pensions for private sector workers,” Mr Bell said.
Most private-sector defined-benefit schemes, which paid an inflation-protected income for life, have closed over the past 30 years, and in 2025–26 about 46% of first-time pension pot accesses involved withdrawing the whole pot. Retirement collective pension schemes, which pool risk among members, could serve as the default. Sir Steve Webb, a former pensions minister now at LCP, welcomed the idea but warned of a “danger” that lifetime-income products could be promoted too heavily: “If people want a secure income for life, the option of buying an annuity has always been there, but very few people freely choose it.”