Labour proposes lifetime income defaults for pension savers near retirement

Labour has proposed requiring pension providers to place savers approaching retirement into a default, annuity-style income plan unless they opt out. Ministers say this would give people a reliable income for life and reduce the risk of pension savings being exhausted, while critics fear it could restrict the pension freedoms that let people decide how to use their savings.

The proposal, called “guided retirement”, is aimed at about 17 million people and would build on automatic enrolment. The Government says 46 per cent of first-time pension withdrawals in 2025-26 emptied the pot, and that pooled retirement schemes could help incomes keep pace with inflation. Former pensions minister Steve Webb argues some people want to spend more early in retirement and may be unable to leave a default deal once they have joined it.