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Getting ready for the emerging default landscape for DC master trusts

Default decumulation is moving from idea to implementation, so it is moving up the agenda for employers and trustees to start considering what the impact of the decisions being made will have on their employees and members. Our latest research at Pi Partnership with 12 of the leading UK master trusts shows an industry already starting to develop different approaches, including cohort-based “flex-then-fix” pathways; continuing glidepaths into retirement; as well as clearer member journeys that blend drawdown, cash and later-life annuity prompts.

The legislative backdrop is also coming into focus. The Pension Schemes Bill 2024-25 introduces a new trustee duty: to design, make available and review at least one default pension benefit solution (“guided retirement”) for members with money purchase benefits. Implementation will be phased from 2027, starting with the master trusts.

getting ready for the emerging default landscape for DC master trusts

For master trusts, the requirements mean:

  • At least one guided retirement solution must be built into the scheme. Unlike single-employer schemes, master trusts won’t be able to transfer members out to another arrangement to meet this duty.
  • Trustees must evidence that the solution takes account of both the membership as a whole and the circumstances of different groups (for example, pot sizes or retirement behaviours).
  • A pension benefits strategy must be developed and kept under review, documenting the design process and decisions. This won’t be published but must be available to The Pensions Regulator on request.
  • Clear member communications are essential. Explaining what the solution is, who it’s suitable for, and what actions (such as choosing retirement age or tax-free cash) are still required.

There are three key policy strands to follow:

  1. Guided retirement scope and exemptions – regulations will set the fine detail, but the assumption is that duties apply across all DC benefits around sensible thresholds (e.g. £10k/£30k).
  2. Targeted Support – the FCA’s CP25/17 consultation proposes a new “targeted support” regime to let firms nudge cohorts with tailored, data-driven suggestions. This could become a key tool for master trusts in helping members engage with defaults at retirement. Final rules are expected in late 2025, with a pre-application support service opening in October. 
  3. Collective Defined Contribution (CDC) – the Government’s August roadmap confirms that multi-employer CDC regulations are due this Autumn, with the authorisation framework itself expected around the end of 2026. The DWP is also exploring decumulation-only CDC – and some master trusts will be aiming to seek authorisation once the regime opens and to launch their CDC scheme in early 2027, making this a live option for master trusts looking to embed lifetime income within their default.

Our research shows providers are already prototyping decision trees, integrating Pensions UK Retirement Living Standards, and designing multi-channel journeys that assume low engagement but still protect against both under and over-spending. Some major changes are ahead so keeping developments on the HR and trustee agenda will be an important part of any wider member communication and retirement planning decision making.

Read our full research: DC Decumulation The Emerging Default Landscape for Master Trusts

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Amanda Burden

Director and Governance Specialist

Amanda is a Board Director of Pi Partnership Group and leads the development of Pi’s services. She works closely with clients, the Pi team and professional advisers to ensure all of Pi’s services meet the changing needs of the pension market and deliver clear value to Pi’s clients.

Amanda has over twenty-five years’ experience in the pensions industry and, as well as ensuring Pi’s services continue to meet the needs of our clients in a rapidly changing pension landscape, is also a member of Pi’s Executive Management Team. She provides specialist project management for clients on a range of services, including adviser selection and review, trustee board assessment and governance design.

As well as being a Fellow of the Pensions Management Institute (PMI) and Chair of the PMI London Group, Amanda holds PMI certificates in Pensions Automatic Enrolment and DC Governance, was a past Prince2 practitioner and is a Certified Risk Management Practitioner.

What do you most enjoy about your role:  Successfully delivering complex projects and creating a happy team environment.

Interests outside work: Travel, theatre and as part of Abundance London helping create beautiful spaces in urban settings.

Top achievement to date: Competing in the 2005/06 Round the World Clipper race.