More than a quarter (27%) of employees approaching retirement admit that they need help understanding their income options, according to a new survey.
Vital Research carried out the study on behalf of financial wellbeing and retirement specialist Wealth at Work, speaking to 1,320 UK employed adults aged over 50, and found that nearly half (46%) said their employer does not provide any support or advice to help them manage their retirement savings.
Almost a quarter (23%) of respondents do not know how much tax they will need to pay on their pension, 15% have no idea how much they can take from their pension without them running out, and 17% are not aware of what income drawdown is.
The findings highlighted that women are more likely to admit to needing support than men, with a third (33%) saying that they required help to understand their options compared to just over a fifth (22%) of men.
Jonathan Watts-Lay, director at Wealth at Work, said that getting decisions at retirement wrong at this stage could have dire consequences, including paying much more tax than needed or making unsuitable choices around how to convert pension savings into income.
He explained that retirement planning is a specialist topic that many employees do not have the skill set for, with a lack of knowledge meaning that some could run out of savings much sooner than expected when they retire.
“Many employers are now putting support in place by providing financial education, guidance and access to regulated financial advice, to help their employees understand their options. Ideally, this should be at least five to 10 years before retirement and cover topics such as maximising tax efficiencies, how to plan for retirement, accessing retirement savings, understanding the risks, and how to seek further guidance and regulated financial advice,” Watts-Lay added.