Changing the story: Jill Henderson, Pensions Expert at Scottish Widows looks at the issues raised for retirees in the prevalence of DC pensions, and how paraplanners can better help DC savers met their retirement goals.
Defined Benefit (DB) pension schemes have been shrinking for some time now and research from The Pensions Regulator notes that the number of schemes reduced from 7,300 in 2012 to 5,190 in 2024, at an average yearly rate of 3%.
Seen as unsustainable by many employers, they have increasingly looked to offload the liabilities of these schemes to insurance firms, as they gradually make way for Defined Contribution (DC) plans. However, this shift has notably widened the retirement outcomes gap – something evidenced in our latest Retirement Report.
The disparity
Despite less than a fifth (19%) of workers saving into a DB pension in 2024, those who do benefit from considerably more retirement security. Our research found that nearly three-quarters (73%) of DB savers are on track for a comfortable retirement standard. The disparity with DC savers is stark, with the vast majority (80%) of those that save into DC schemes only on track for a minimum lifestyle in retirement. Digging further into the statistics, less than a third (30%) will secure a comfortable retirement and one in ten say they will never be able to retire.
It is understandable that as a result many DC savers lack confidence when it comes to preparing for retirement, with around two in five (21%) revealing they do not know the amount of income needed to maintain their current lifestyle in retirement. Whilst auto-enrolment has been a monumental success since its introduction, our findings demonstrate that 35% of those contributing the minimum rate within a DC scheme are at risk of not being able to cover their basic needs in retirement.
Changing the story
Whilst the above findings highlight notable risks for DC savers, they also reinforce the essential role paraplanners and advisers play in shaping more secure retirement outcomes. With DB provision rare nowadays, ensuring DC clients are on track for adequate income in retirement should now be a central part of financial planning.
Stress-testing retirement adequacy
With such a large number of savers not on track for a comfortable retirement, they will rely on paraplanners to model realistic income scenarios based on clients’ current and projected contributions. Cashflow forecasting tools can help highlight shortfalls and assess how even small percentage increases can influence long-term outcomes, thanks to compounding.
Spotting fragmented pension pots
Given that people tend to change jobs more frequently than they used to, the number of small pots has increased drastically – with the Pensions Policy Institute estimating there is £31.1 billion lying in unclaimed, inactive, or lost pension pots. And yet, our findings show just 14% have consolidated their pensions before and intend to do so again. Here, paraplanners can add value by identifying opportunities for sensible consolidation – while checking for valuable guarantees, protected ages, or higher tax-free cash entitlements that might warrant leaving some pots untouched.
Clarifying scheme structures and assessing income strategy
Too often clients can approach the advice process unclear about the pensions they may hold – not just in terms of value, but scheme type, ownership and income potential. With some juggling a mix of legacy DB entitlements and multiple DC pots, paraplanners need to help piece together the full picture. From identifying scheme types and benefits to clarifying vesting timelines and income options, this groundwork is instrumental in shaping a compliant, tax-efficient decumulation strategy tailored to long-term client goals.
Preparing clients for retirement conversations
With increasing pressure on DC savers to self-manage, paraplanners must develop clear, evidence-based retirement plans that clients can engage with. Framing recommendations around lifestyle outcomes rather than projections helps bring the value of planning to life – and reinforces the importance of early action.
And while future developments under the Advice Guidance Boundary Review may see employers offering targeted support to help savers make better-informed decisions about their retirement, this is not yet widely available – meaning paraplanners remain pivotal in bridging today’s guidance gap. Their ability to combine technical expertise with human insight helps turn complex retirement data into meaningful, personalised conversations with advisers that clients can trust.
In a retirement landscape increasingly reliant on individual decisions, the paraplanner’s role as an investigator, modeller and translator of pension complexity has never been more vital.
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