EXCLUSIVE: Almost half (47%) of employer respondents say the pension freedoms have led to more employees wanting or needing guidance around pension decisions at retirement, according to research by Employee Benefits and Close Brothers.
The Employee Benefits/Close Brothers Pensions research 2016, which surveyed 250 employer respondents, also found that 36% of respondents said more employees want more guidance regarding pension saving throughout their career.
This is broadly in line with employers’ expectations prior to the reforms coming into effect in April 2015. Almost half (48%) of respondents to the 2014 research, published in November 2014, for example, felt that more staff would want and need more guidance around their pension decisions at retirement, while 43% expected an increase in the number of staff that wanted more guidance throughout their career.
Employees’ increased desire for guidance is hardly surprising given the greater choice afforded to them by the reforms. These give staff over the age of 55 much greater freedom in how they access their pension savings, with scheme members now able to take their pensions wealth as a lump sum, drawdown or as an annuity rather than being subject to compulsory annuitisation.
The big change this year in how respondents are adapting their pension arrangements to reflect or accommodate the reforms can be seen in the percentage that are referring all staff to the government’s free advice service Pension Wise. Last year, more than a quarter (27%) said they were taking this course of action. This has now fallen to 10% of respondents.
It may be employers have lost confidence in, or are reluctant to use, the service given some much publicised difficulties or that employers have recognised the value of facilitating the provision of guidance and advice for staff via the workplace.
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