Just under three-quarters (72%) of respondents say they are not fully prepared to deal with the consequences of the pension reforms announced in the March 2014 Budget, according to research by Aon Hewitt.
Its research, which questioned more than 300 pension professionals, found that one in five (20%) respondents would need significant extra resource, in terms of time, money and external support to implement the changes.
The research also found that just 7% would offer defined contribution schemes with an in-house drawdown option.
More than half (57%) said they would identify external preferred providers for decumulation to help employees consider their options at retirement.
Respondents were evenly split when it came to the issue of whether employers should provide financial advice. However, of the 50% that said they would fund financial advice for staff, 26% said they would only do so for certain segments of the workforce.
Kevin Wesbroom (pictured), senior partner at Aon Hewitt, said: “The Budget changes are really quite fundamental for all types of schemes, defined benefit and DC alike.
“Sponsors and trustees need to stand back from their schemes and ask some fundamental questions about how they see their relationship with members.
“They then need to align their administrative processes, member communication and education systems to support their decisions.”
Jan Burke, head of DC consulting at Aon Hewitt, added: “While few look set to offer an in-house drawdown option, the vast majority expect to consider the options available in the market, whether they are drawdown policies from insurance companies, asset managers, master trusts or whatever, and then to identify preferred providers in the relevant category.
“Just under 30% of respondents said they would leave this decision entirely to members, and that the scheme would simply deliver a cash lump sum on retirement.
“The preferred provider route seems to make a lot of sense but there is very little time to decide on the products to be offered and to get processes and communication in line with that choice.”
