So what’s happening in less than one month, Easter? End of the tax year? New holiday entitlement? All that, yes, but the introduction of pension freedoms also becomes a reality. Here are five areas employers and trustees should be focusing on in the next four weeks:
1. Engagement Strategy
Employers and trustees should be well on their way to putting in place the strategies they need to engage with their members and help those thinking seriously about taking benefits. Decisions on what freedoms to allow within trust-based schemes should have been discussed, agreed and documented. Communication, engagement and education strategies are a crucial part of this. Any new communications helping members understand these new freedoms should be reviewed carefully over the coming months to ensure the messages are getting through and enable your members to make appropriate decisions.
2. Which groups to focus on first?
If time is not on your side, then you should be preparing yourselves for the new freedoms for three groups in particular — those who have delayed making retirement decisions, those coming up to retirement and those wishing to take benefits early and continue to work — they should all have thought about:
- What income and capital do I want/need?
- What have I got?
- How am I going to achieve my objectives?
3. Discussing money with members
The decisions on how members want to take their money, FAD*, UFPLS**, annuity, all cash or a combination of these, should now be close; the only thing uncertain might be which provider or product to choose.
4. Speak to your adviser
Advisers should have advised trustees, corporates and individuals on how to manage their arrangements in the new environment and what products to use and what technology solution can help them get there, and be certain that they know and understand what is required of them from the regulator. If you’ve yet to speak to your adviser, then do this as soon as possible.
5. Understand which providers are ready
Which brings me on to the providers. They should be lined up waiting to press the button on their shiny new products. Glossy brochures in every reception area, adverts in every newspaper and magazine and talking to consultants and advisers about what they can do. New products will be coming to the market over the coming months making this an exciting time for anyone approaching retirement, but this does mean that advice will be more important than ever.
Post April 6
Although the regulations have become clearer in recent days, advice to trustees, employers and individuals may still have to change as the market develops, so make sure you keep your eyes and ears peeled or speak to your adviser.
No, don’t panic — embrace these exciting changes, be prepared to adjust that route and prepare members for the new world by setting expectations and keeping them updated. Advice is going to be more important than ever and we have a very busy time ahead of us.
* FAD: Flexi-access drawdown
** UFPLS: uncrystallised funds pension lump sum