Good Decumulation of Defined Contribution Pension Plans throughout Europe

The paper focuses on decumulation in workplace DC pension plans in different countries. It explores the pros and cons of decumulation options, both in cases where there is no (or very limited) choice available to members at retirement and cases where members have choice. In the latter case, it looks at how members can be informed to make a choice that is right for them.

Furthermore, the paper explores (i) what options there are available at retirement, and (ii) potentially what guidance, choice and tools could be desirable during the decumulation phase. Answers to these questions might vary from different respondents, and this paper particularly focuses on the needs of participants (i.e. members and beneficiaries of pension plans) and employers.

As a general rule, pension options should be kept as simple as possible in order to minimise both (i) administrative costs (ii) and the risk that the options are not understood. The participants have different kinds of needs in different countries, and those country specificities also need to be taken into account in the decumulation phase.

The paper continues the series of PensionsEurope publications on DC issues which include Principles for Securing Good Outcomes for Members of Defined Contribution Pension Plans throughout Europe, Pension Design Principles applied to modern Defined Contribution solutions and Key Principles of Good Governance for Workplace Defined Contribution Pension Plans throughout Europe. These papers are addressed to regulators and policymakers across the EU, researchers, and not least to social partners and those running pension plans.