Many defined benefit pension members are making transfer to take advantage of the freedoms
Half of UK employers admit that their employees, both in defined benefit and defined contribution schemes have a limited understanding of the pension freedoms, or are still confused about what the changes mean to them, according to recent research from Close Brothers Asset Management.
This figure comes as the industry approaches the anniversary of the introduction of pensions freedom and choice – and may be a cause for concern if employees make ill-informed decisions about their retirement saving.
The same research reveals that since April 2015, over a third of (36%) of employers have seen staff asking transfers from a DB to a DC pension scheme to take advantage of the freedoms.
Jeanette Makings, head of corporate services at Close Brothers, commented: “The pension freedoms have dramatically changed the way individuals can access their pension savings, and it’s therefore to be expected that more DB members will want to review whether a transfer is suitable for them. It is vital that individuals considering a transfer get professional advice from specialists who are experienced in reviewing pension transfers.”
It is not the only aspect of the changes to pensions concerning industry experts. Employee benefits specialist Secondsight warns that reduction of both the annual and the lifetime allowances from this April could leave employees with huge tax bills if they do not fully understand their savings.
Blogging for Reward, Jonathan Watts-Lay, director, WEALTH at work, is strongly encouraging all employers to understand what their employees need to know about the freedoms – and to initiate – financial education and advice to help staff make informed decisions.
WEALTH at work director Jonathan Watts-Lay is blogging about the key areas of employer consideration when helping their employees through retirement in Reward's financial education hub. Read his first blog HERE
The hub examines all the changes in pensions and looking at how you can help your employees with financial education across all their savings. CLICK HERE to access the hub
For further information about WEALTH at work, please CLICK HERE