DWP proposes that workplace pension schemes offer an income for life

What has been announced

The plans were presented by the Minister for Pensions, Torsten Bell, at the ABI Long-Term Savings Conference. The DWP press release states that under Guided Retirement, pension schemes would have to provide a default pension for savers approaching retirement. It would provide a stable income for life, without savers having to make complex investment decisions.

“Private sector workers deserve a much better deal when it comes to pensions,” said the minister, Torsten Bell.

The consultation was prepared jointly by the DWP, HM Treasury, the Financial Conduct Authority (FCA) and The Pensions Regulator (TPR). It sets out initial proposals for secondary legislation under the Pension Schemes Act 2026. The press release does not say when the new duties would take effect.

What a “default” pension means

A default pension is the option the scheme itself offers. That does not make it compulsory. The DWP Guided Retirement guiding principles state that introducing default pensions does not reduce existing pension freedoms: savers would be able to choose a different option. The same document says that a scheme member would receive payments through the default pension only if they agreed to it when they started to access their savings. According to the DWP, most people would only need to decide when to start taking their pension.

The reform covers defined contribution (DC) workplace pensions: both trust-based schemes and FCA-regulated workplace pensions.

Why this is being done

The press release states that, thanks to auto-enrolment, 9 in 10 eligible private sector workers are now saving, compared with 4 in 10 in 2012. It also states that in 2025/26 around 46% of first-time pension pot accesses involved the pot being fully withdrawn.

“People should not have to navigate complex pension decisions alone,” said Therese Chambers, Executive Director at the FCA.

A new collective scheme: RCPS

Alongside this, the DWP presented a new type of scheme: Retirement Collective Pension Schemes (RCPS). These would pool members’ risk and offer a fully managed pension. The government response to the RCPS consultation and draft regulations were also published.

According to the 2025 DWP consultation (at the time these schemes were called “Retirement CDC”), payments from such schemes are not guaranteed: they are adjusted every year and can go up or down. We have not yet checked whether this remains the same in the latest documents.

What this means if you are saving now

• These are still proposals. The detailed regulations are still under consideration, and the press release gives no date for when they would take effect.
• If you work in the private sector and have been automatically enrolled into your employer’s pension, these proposals may also affect your savings.
• The choice stays with you. A default pension would be offered, but you would not be required to take it.
• The consultation deadline. The official consultation page states that responses are accepted until 11:59pm on 21 December 2026 (the DWP press release says “until 22 December”). You can respond using the online form on that page or by e-mail to consultation.guidedretirement@dwp.gov.uk. The consultation is aimed mainly at pension schemes, their providers and employers.
• Free help for people aged 50 and over. The MoneyHelper service Pension Wise offers free, impartial guidance to people aged 50 and over with UK DC pension savings. Tel. 0800 011 3797, Monday to Friday, 9am to 5pm.

“Londono Žinios” will report when more information is published about the outcome of the consultation.

Based on: the DWP press release “New plans 'resurrect' genuine pensions for millions of private sector workers” on GOV.UK (3 November 2026); the DWP consultation page “Guided retirement: policy consultation” on GOV.UK (published 3 November 2026); the DWP document “Pension Schemes Act 2026: Guided Retirement guiding principles” (updated 27 October 2026); the DWP consultation “Retirement Collective Defined Contribution pension schemes” (published 23 October 2025); the MoneyHelper page “Pension Wise” (accessed 5 November 2026).

Republication must credit Londonozinios.com as the source.