The government has opened a consultation on plans for workplace pension providers to offer eligible savers a default route from a defined-contribution pension pot to retirement income. People who do not want to use the suggested option would remain free to choose another way to take their savings.
The Department for Work and Pensions developed the proposals with the Treasury, the Financial Conduct Authority and the Pensions Regulator. The consultation opened on 3 November 2026. The government lists the response deadline as 11.59pm on 21 December, but also gives 22 December as the end of the consultation period. Anyone planning to respond should check the deadline before submitting. The consultation sets out initial ideas for secondary legislation and corresponding regulatory rules, not a finished system already in operation.
A defined-contribution pension builds up a pot from payments made during working life. Its value depends on factors including contributions, investment performance and charges. When accessing the pot, the saver must decide how to use it; a pot does not itself establish a particular level of retirement income.
How the default would work
The proposed approach, called guided retirement, would require providers to design or identify default pensions for groups of members with similar needs. A default would be a pre-designed option offered when an eligible person wants to access their savings, rather than a tailored assessment of every aspect of that person’s finances.
A saver would first contact the provider to access their pension. The provider would present the relevant default, but the person would need to agree before payments could start. If there is no further contact after the offer, the funds would remain invested. The proposal is not to start a retirement income automatically without the saver’s agreement.
Where a provider has several defaults, it could ask questions to identify the appropriate group. If a person cannot or does not answer, the provider would still have to allocate an option using factual information it holds, such as age and pot size. Allocation of an option would not replace the need for consent to enter it.
Income protection and smaller pots
The consultation proposes that default pensions should normally provide protection against longevity risk: the risk that a person outlives their savings. The suggested threshold is more than £10,000 in relevant defined-contribution pots held with the same provider, after deducting any pension commencement lump sum withdrawn. The threshold is a proposal, and responses are being sought on whether it is appropriate.
Below the threshold, a provider would not be required by that rule to offer regular income or longevity protection, although it could still do so. The proposed approach combines relevant pots held with one provider for the threshold test; it does not say that every pension pot a person holds with different providers will automatically be combined.
A straightforward drawdown arrangement on its own would not meet the proposed longevity-protection requirement. Possible approaches include managed drawdown followed by an annuity, or a retirement collective pension. These approaches work differently, and protection against outliving savings does not mean that every option guarantees a fixed level of income.
Consent, flexibility and safeguards
The proposals include a minimum 30-day cooling-off period for default pensions. They also envisage one main consent point when someone enters an arrangement, even where it has more than one phase. Before an irreversible element takes effect, providers would be expected to make their best efforts to engage the member, giving them a chance to update their circumstances or opt out.
Providers would need to consider matters such as inflation, flexibility and whether a spouse or dependant should receive protection. These are design considerations, not a promise that every default will have the same features. Any limits, including restrictions on extra withdrawals, would need to be communicated to members.
Collective pensions
A separate consultation covers draft regulations for retirement collective pension schemes. These schemes would pool investment and longevity risks and aim to pay an income for life. The income level would not be guaranteed; the proposed rules allow for adjustments to benefits, including reductions in some circumstances.
The collective-pension consultation closes on 15 December 2026, earlier than the guided-retirement consultation. The draft regulations address matters including authorisation and how these schemes would operate. They are being considered alongside, rather than instead of, the wider default-pension proposals.
Who is covered and when
The proposals cover both trust-based workplace schemes and contract-based workplace pensions, although some schemes and individuals would be outside the scope. For example, eligible deferred pots of £1,000 or less that meet the small-pot consolidation rules are proposed for exclusion. Some people already drawing on flexible pension benefits who are not in a default pension could still be eligible for a default in respect of remaining savings.
The territorial position differs by rule. Occupational pension legislation is the responsibility of the department in Great Britain, while it is devolved in Northern Ireland. Proposed rules for providers regulated by the Financial Conduct Authority extend across the UK. The consultation is relevant to stakeholders in both Great Britain and Northern Ireland.
The current timetable is a projection rather than a start date already fixed for every scheme. Most master trusts and regulated workplace providers are expected to comply by summer 2029, while single-employer trusts and common-employer group master trusts are projected to follow by summer 2030. Some master trusts intending to use a retirement collective pension as their default could also receive a conditional extra year to deliver it. The timing depends on the regulations and regulatory policy being made, and the proposals remain subject to consultation and parliamentary agreement.
The consultation invites responses from savers, employers, providers and consumer representatives as well as pensions professionals. Its questions cover the size threshold, the design of income options, consent and practical delivery. The proposals could change as the responses are considered and further rules are developed.
