Pensions minister Torsten Bell's proposed pension changes have sparked warnings from finance experts, who argue the plans would strip away individual control and herd savers into rigid, one-size-fits-all pathways.
Under Government proposals, millions of private sector workers who save in a pension will be given an option to turn their retirement savings into an income. Mr Bell on Tuesday (November 3) announced plans for a consultation on "guided retirement", which would require pension schemes to provide a default pension for savers nearing retirement.
Government argues plans bring back income pensions
The Government argues that the plans will bring back pensions which pay an income - often protected from inflation - for the entirety of a person's retirement and without the need to make complex financial decisions.
It comes amid concerns some people risk running down their pension savings too fast in retirement. The Department for Work and Pensions (DWP) said in 2025-26, about 46% of first-time dips into pension pots saw entire amounts fully withdrawn.
Experts raise alarm over default options
Mr Bell's announcement was hailed by some, including Richard Knox from the Pensions Regulator. He said: "People need more help to turn a pension pot into a sustainable retirement income and well-designed default options at retirement will help people navigate these complex and important financial decisions."
But others have raised the alarm. Tony Redondo, founder of Cosmos Currency Exchange, told the Daily Express the Government's consultation on the proposal is "a troubling step towards funnelling millions of savers into state-sanctioned defaults like collective pension schemes".
He asked: "Would you take medical advice from someone with no medical training? Of course not. So why take pension advice from a government so remarkably lightweight on business, finance and economics?"
Mr Redondo added: "Far from liberating retirees, it strips away individual control and herds people into rigid, one-size-fits-all pathways." The expert explained that in his view the "real danger" is generating a false sense of security as collective schemes offer no guaranteed income.
He said: "Default models punish anyone who needs something bespoke. Savers deserve full control of their hard-earned money, not paternalism that traps wealth in institutional pots."
Advisers warn against replacing personalised advice
Nouran Moustafa, an independent financial advisor at Roxton Wealth, said her biggest fear is complicated pension decisions would be replaced with convenient defaults people accept without understanding what they are giving up. She added: "A default should be a starting point, never a substitute for personalised financial advice."
Fink Money founder, David Belle, said a simple default option could help many who cash out their whole pension pot, but his worry is who would set it. He said: "Inertia is the whole point of this policy, so whoever designs the default makes the biggest money decision for millions of people. An inflation-protected income starts lower than many expect and there's usually no going back."
Ministers also hold a reserve power to push default funds into UK assets. That money should be run for members alone. Unused pensions face Inheritance Tax from April 2027 too. "If people are going to hand over control for 30 years, they need to believe the goalposts won't shift again in three years."
A Government spokesperson said: "Millions of private sector workers are saving for retirement, but reach the end of their working lives with a pot of money rather than a pension they can rely on."
"Guided retirement will change that, giving them the option of a secure income for the whole of their retirement and we are working with pension providers and employers to make sure it is practical to deliver."
"This is not a one-size-fits-all approach. Pension schemes will design around the needs of their members and anyone who wants a different option will always be free to choose one, including opting out altogether."
A DWP source said the consultations do not affect Inheritance Tax and pensions schemes "may" take factors such as a member's wider assets, marital status and retirement objectives into account when designing retirement income defaults.
