Integrating guaranteed income into the retirement journey could produce annuitisation rates of between 55 per cent and 60 per cent without removing member choice, research from Nuveen and the TIAA Institute has suggested.

The report, Beyond auto-enrolment: International lessons for converting UK retirement savings into lifetime income, drew on evidence from 11 countries, with a particular focus on Switzerland, Chile and TIAA’s experience of voluntary annuitisation in the US.

It found that around 55 per cent of Swiss retirees select full or partial annuitisation, while approximately 60 per cent of eligible retirees in Chile choose an immediate or deferred annuity.

Neither country mandates annuitisation, but both integrate guaranteed income into the process of accessing retirement savings and minimise the practical and behavioural barriers facing retirees.

The research argued that this approach could inform the design of the UK’s guided retirement framework, with the Pension Schemes Act 2026 requiring providers to offer default pension benefit solutions.

It suggested that the decision to enter a default retirement pathway could also authorise the later automatic conversion of part of a member’s savings into guaranteed income, unless the member subsequently opts out.

However, the report noted that this would depend on clear communication, transparent pricing, effective governance and the infrastructure needed to make the process straightforward for members.

Consolidation could also prove important, as retirees in Switzerland and Chile generally reach retirement with one account and a standardised set of options.

In contrast, UK savers are likely to hold several fragmented pension pots with different providers.

The researchers stressed that improved visibility and consolidation of pension savings, including through pensions dashboards, could therefore help members compare their options and support the adoption of guided retirement solutions.

Meanwhile, evidence from TIAA also highlighted the importance of engaging members close to retirement.

Between 80 per cent and 95 per cent of its members who choose to annuitise do so within a year of retirement, despite having the option to defer the decision.

The report warned that products relying on members returning to make a separate guaranteed income decision several years after entering retirement may consequently fail to work as intended.

It also found that middle-income savers were the most likely to annuitise across Switzerland, Chile and TIAA’s US membership, as these members were more likely to have meaningful defined contribution savings but limited alternative sources of guaranteed income.

Nuveen head of UK institutional distribution, Sophie Ballard, argued that the UK was at an “inflection point” as the industry moved from policy design into implementation.

“We believe that products which can seamlessly embed income, ideally guaranteed income, will be best suited to supporting savers through the accumulation to decumulation transition and to turn pension wealth into income they can rely on throughout retirement,” she continued.

“The evidence is broadly encouraging, showing that integration rather than mandation can achieve meaningful rates of guaranteed income adoption, aligning well with the UK’s guided retirement approach.

“But our research also shows that meaningful change takes time. As an industry, we must recognise this and allow schemes and providers the space to adapt, embed new approaches and become accustomed to new initiatives.”

Indeed, the report cautioned that UK adoption rates could initially be modest because of fragmented pension pots and the country’s starting point of fully voluntary annuitisation.

It argued that low early take-up should not automatically be interpreted as evidence of failure, as new retirement models could take time to gain savers’ confidence and become embedded within the wider system.

TIAA Institute head of applied research and activation, Catherine Reilly, added that the evidence was consistent across the different pension systems examined.

“Our own data shows the vast majority of annuitisation decisions happen within a year of retirement, which should give UK providers real confidence about where to focus their design effort as guided retirement takes shape.”

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