The Pensions Regulator has warned that millions will need more help with retirement planning after its latest data review revealed that 51% of pension savers withdraw all of their pension pot as cash.

The TPR says that pension savers need “more help” in retirement choices and is calling for a pensions 'sat nav' approach.

The call coincides with the publication today of a new report from The Pensions Policy Institute sponsored by the TPR.

According to a TPR review of the latest pension data:

• 70% of pension savers are fully withdrawing their pension savings without professional advice or tailored guidance
• Of the more than 450,000 pots accessed for the first time between October 2023 and March 2024, 51% were fully withdrawn as cash
• Median pension wealth at retirement for those with some DC savings is expected to increase to £131,000 for those born between 1975-1979.

The TPR said that its research indicates that the millions saving into defined contribution (DC) pensions need more help and guidance to make sure they access the right, “user-friendly retirement products for their personal circumstances.”

The FCA is currently reviewing the advice/guidance boundary to provide more targeted support to consumers, including pension savers.

The PPI report issued today reviews the UK retirement income market and the challenges to delivering value for money in decumulation.

The TPR says pension savers need a retirement “sat-nav” to help them make the right choices.

The research indicates that many retiring savers are taking full cash withdrawals or stay in investment strategies designed for pre-retirement, not post-retirement, needs, the TPR said.

The regulator said it wanted the PPI’s findings to spark industry debate on the way ahead, particularly as DC pots continue to grow. It wants “better saver outcomes” and a consensus on the challenges to delivering value post-retirement.

Patrick Coyne, interim director of policy and public affairs at the TPR, said: “Automatic enrolment built a nation of savers. Now we must move from a savings system to a pensions system, and that requires a ‘sat-nav’ for retirement which simplifies options and empowers savers to make informed choices.

“Without the right support, savers may find themselves forced to work for longer or find themselves strapped for cash when they should be enjoying older life.  

“Plans for a Guided Retirement duty in the Pension Schemes Bill present a fantastic opportunity for industry and policymakers to provide products and services suitable for different kinds of savers. We are keen to help and that is why next month we are also launching an innovation design service to get new ideas off the ground.”

The TPR wants to see pension trustees taking a bigger role in using scheme data to target support and guidance to those who needed it to “navigate” decisions at retirement. It wants more tailored communications and “targeted nudges” for pension savers.

The TPR believes the Pensions Dashboards will also be able to help with targeted support.

The TPR says it will continue to work closely with the Department for Work and Pensions (DWP) and the Financial Conduct Authority (FCA) to put in place the right frameworks to encourage innovation in savers’ interests and ensure pension savers across contract-based and trust-based schemes are “appropriately supported” to navigate complex retirement choices.

It is working with the FCA on its review of the boundary between advice and guidance and targeted support as well as the DWP’s proposals for a Guided Retirement duty.

• Assessing the UK Retirement Income Market: Defaults, Active Choices, Innovation, and the existing gaps and challenges for Delivering Value for Money, a PPI report sponsored by TPR is published on the PPI website today (Wednesday 14 May). The research is based on a review of existing literature, stakeholder interviews, and available data on the DC landscape including figures from the DWP, Financial Conduct Authority and the Institute of Fiscal Studies.