Reward Live: Employees must be able to afford to retire, says expert
Employees will increasingly seek guidance about how they manage their finances as they approach retirement, and employers must be willing to help, said Jonathan Watts Lay, director at Wealth at Work at Reward Live.
“I sense there’s been a huge amount of disappointment from employees about so-called flexibility around pensions,' he told delegates, 'because in reality it isn’t very easy for employees to get their heads around.' He added: “This means employers need to ensure staff understand the options available to them, so that their staff can actually afford to retire and have a meaningful income,” he added.
Research by Wealth at Work already found 70% of employees already want help understanding their pensions – a number which Watts Lay believes could rise to 80-90% amongst today’s 55-year olds.
He said: “At the point of retirement, I suspect only around 10-15% of people will take out an annuity. This leaves a huge number of people that will need to be sign-posted where to go.”
He accepted employers can get confused about the difference between offering ‘guidance’ (non-regulated information on what staff ‘can’ do) and advice – which can only be offered through regulated providers. However, he said firms should all be considering providing financial education to at least provide ‘guidance’.
He said: Pensions have been totally flipped on their heads. As more products come onto the market, there’s an expectation employees will only get more confused without some sort of help.”
He said: “The worst thing employers can face is having lots of people working for them well into their 80s simply because they can’t afford to retire. Employers have a duty to help their staff manage this part of their life.”