PensionsEurope publishes the report Decumulation in Focus: Understanding the Payout Phase
Bucharest, 11 April 2025. Yesterday, PensionsEurope published at its Annual Conference its new report Decumulation in Focus: Understanding the Payout Phase, providing an in-depth look at how the decumulation phase is structured in occupational DC and hybrid pension plans across Europe.
“As many pension systems in Europe shift from DB to DC and hybrid arrangements, more risks are transferred to individuals,” says Klaus Stiefermann, Chairperson of PensionsEurope. “This requires careful consideration from policymakers, employers, and pension administrators to ensure that participants will receive adequate retirement income and the protection they need.’’
A central theme of the report is the fundamental tension between ensuring stable, lifelong income and providing the flexibility many retirees need, given that their spending patterns often fluctuate over time or in response to unexpected expenses. The report contrasts socially oriented systems—where the decumulation phase tends to be more structured and secure—with more liberal systems that offer individuals greater choice, but also demand higher levels of financial literacy and responsibility.
The report analyses key decumulation options—including annuities, drawdown options, and lump-sum payments—and evaluates their respective advantages and disadvantages in addressing critical risks such as longevity, inflation, and capital preservation. It explores how decumulation strategies are shaped by the diverse legal, regulatory, and tax frameworks across European countries.
Additionally, the report highlights the importance of supporting individuals in making informed decisions about their retirement savings and how to mitigate or prevent poor outcomes, including the risk of running out of money.
In its final chapter, the report puts forward a set of principles, including:
- Clearly defining adequacy goals for retirement income;
- Providing lifelong income, unless state pensions and/or personal savings are sufficient to cover retirees’ essential expenses, or the DC/hybrid pension pot is too small to fulfill that role;
- Offering flexible options where appropriate, while safeguarding against poor financial outcomes;
- Considering the use of default options, especially in systems where different options are available;
- Aligning tax policy with retirement income objectives;
- Ensuring that members and beneficiaries receive clear and adequate information, especially when they must make active decisions;
- Improving engagement by making guidance and advice more accessible to members and beneficiaries.
‘’As is often with pension matters, there is no one-size-fits-all approach and there is no universal solution. Our paper reflects this. Not all of our recommendations will necessarily work together, and some will be better suited to specific pension systems than others.’’ explains Klaus Stiefermann, Chairperson of PensionsEurope.
This publication was prepared by PensionsEurope’s Standing Committee Future of Pensions, its strategic group working on shaping the long-term development of funded pensions across Europe. It builds on PensionsEurope’s longstanding work on DC and hybrid pensions and provides an update to our previous report on the decumulation phase published in 2019.
For more information and to access the full report, please visit here.
