62% do not think guidance guarantee will be enough

Nearly two-thirds (62%) of respondents do not think the guidance guarantee announced in the 2014 Budget will provide enough support for members of defined contribution (DC) pension schemes ahead of retirement, according to research by Mercer.


Its research, which surveyed more than 300 employers and trustees, found that 38% plan to simply facilitate access to the free independent guidance.

The remaining respondents (62%) will offer additional support, although how they intend to deliver this will vary by scheme.

More than three-quarters (76%) of respondents expect less than 20% of defined benefit (DB) pension members to transfer to DC schemes, while only 16% expect more than 40% to do so.

More than a third (37%) of respondents believe they will offer staff additional workplace savings plans in the next three to five years to provide flexibility and choice.

Less than a third (29%) will not offer other workplace savings plans and 34% are undecided.

Roger Breeden (pictured), UK DC and savings product leader at Mercer, said: “Receiving generic guidance provided shortly before retirement will be useful, however, for most DC savers it will be too late.

“To increase their chances of getting a decent pension, individuals need to make their investment and contribution choices at a much earlier stage.

“Trustees and employers need to review their communications and support to ensure employees get a full picture of the options available to them and the consequences of these early decisions.

“Once the changes announced in the Budget are fully defined, they also need to check that all communications material meet the new requirements.”