Most of us would agree that pensions were complicated enough before April 2015, but since the pension freedom changes came into effect it has got a whole lot worse.
No one can deny that the freedoms are a welcome change from the previously rigid and stuffy world of retirement, but does free reign equal better results in retirement for your employees?
Opportunities are plenty but so are the risks
In order to truly benefit from these reforms, individuals must be educated or, at least, informed about where to go for support. Freedom and choice in pensions introduced Pension Wise, an impartial guidance service from The Pensions Regulator and the Citizens Advice Bureau. Pension Wise can be used by individuals approaching retirement that may be looking for help and advice and is unquestionably a great idea in principal. Sadly, these sessions are limited and will provide guidance only. So, given the complexities of taking retirement benefits, users of this service may leave their appointment with more questions than they walked in with.
Helping your employees can be as simple as signposting to the Pension Wise service. Maybe providing in-house training sessions for your staff is the route you go down. But either way, you should do something. Pension freedom has implications for your business too. You will probably need to make some changes to your pension scheme, communications and processes. Most employers will want to create an environment that nurtures educated, well-informed employees who can take advantage of the new freedoms given to them. Take a look at some of our tips to find out more:
- Pension Wise – Direct your staff to this service in the first instance but expect staff to have a whole lot more questions: www.gov.uk/pensionwise
- How do you help protect your employees from poor advice? Circulate information and updates from a trusted source. They value your guidance and support. See below for some more information on trusted sources.
The Pensions Regulator (TPR) – www.thepensionsregulator.gov.uk
Financial Conduct Authority (FCA) – www.fca.org.uk - Is your organisation ‘pension freedom ready’? Can your pension members access the freedoms within your scheme? Get in touch with your pension consultant or provider and ask these questions:
Q1. Can members take their entire pension as cash?
Q2. Will individuals need to take out new plans in order to access flexible income?
Q3. Are any processes in place to stop individuals making an irreversible decision?
Q4. Does a policy need to cease in order to take benefits? - Pension freedom is mainly about taking benefits, but don’t forget that younger staff need help to build a pension fund to spend in retirement. Education and support delivered at regular intervals in an individual’s career encourages a healthy attitude to saving and retirement. Encourage your staff to log online to their pension plans and utilise the modelling tools and calculators available with your provider.
Taking positive action to recognise and deliver the best outcomes for your employees begins with getting more informed. Read more here.