Research shows that employers have still not adapted to the pension changes
As we start the New Year, the pensions industry will be hoping that 2016 heralds a ‘bedding in’ of regulations and policies rather than further dramatic change.
Nearly a year on from the introduction of freedom and choice for retirees, employers and employees are slowly getting to grips with what this means for them – but there are still huge knowledge gaps.
Survey results from WEALTH at work, a provider of financial education, guidance and advice in the workplace reveal only 11% of employers surveyed believe their employees are saving enough for their retirement..
The research also showed that currently a large chunk of employers – 40% – do not offer their employees financial education around the pension flexibilities at-retirement.
With concerns around savings and the ageing workforce, it is now imperative for employers to look into what they need to offer their employees in terms of financial education and even advice.
Do your employees know how much they have saved?
Do they know how much they need to fund their ideal retirement?
Do they know what choices are available to them?
According to WEALTH at work’s research, in reality almost one third (32%) of employers surveyed do not provide access to the new pension flexibilities in their scheme at-retirement, while over a quarter (26%) do not allow their employees to take money from their pension (from age 55) whilst they are still working for them.
Meanwhile, if employees are not actively engaged in selecting an investment option (glide path), nearly half (43%) of employers surveyed will default them into annuity tracked glide paths – despite a significant fall in annuity purchase as a preferred option for employees.
Jonathan Watts-Lay, director, WEALTH at work comments, “It is essential that employers provide financial education around the pension flexibilities as without this, they could be left vulnerable to making poor decisions. Professional financial advice following education will further help avoid suffering the consequences of making poorly informed decisions.”
As we approach the one year anniversary of the pension flexibilities, Reward has opened the discussion about financial wellbeing and education via our new financial education hub, where Jonathan will be blogging about the key areas of employer consideration when helping their employees through retirement.
Reward and WEALTH at work have launched a new financial education hub, discussing 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