Almost a third (32%) of respondents do not plan on reviewing or adjusting existing defined contribution (DC) pension services for employees following the introduction of the pension flexibilities in April, according to research by Close Brothers Asset Management.
Its latest Business barometer survey, which questioned 685 employers, also found that 34% of respondents do not know whether they need to review their current pension scheme for employees.
The research also found:
- Just 13% of respondents plan to review their lifestyle of default fund in response to the pension reforms.
- 13% are aware that they need to alter staff pension schemes to allow for cash withdrawal and flexi-drawdown.
- More than a quarter (26%) of large employer respondents (with a turnover of more than £10 million) will not be reviewing their DC pension service, compared to 42% of smaller organisations.
Jeanette Makings (pictured), head of financial education services at Close Brothers, said: “What may have worked for employees in the past is simply not going to stand up against the new age of pension planning. As there are new options for savers to take, so should there be updated choices within the workplace scheme they have been paying into for many years.
“Default funds may no longer provide the best investment strategy for those who don’t intend to use their pension to fully fund an annuity, so employers need to take steps to review what they have in place and ensure they are adapting accordingly.
“Kick-starting communication around this, by speaking to staff to help them understand where and how their pension is invested and whether that continues to be the most suitable strategy for them is the first step.
“Doing this, and reviewing existing funds, is not something that has to eat up resources, and there is always help and advice available. In the long term, both the businesses and their staff will benefit.”