51% not confident Pension Wise will deliver support

More than half (51%) of employer respondents are not confident that the government’s guidance guarantee Pension Wise service will provide their employees with adequate support around decisions at retirement, according to research by Hymans Robertson.

Pension support

The pensions and risk consultancy’s research, which questioned 100 HR directors in organisations with more than 500 employees, found that nearly a third (63%) of respondents think their employees will look to their organisation, as well as to government, for retirement guidance or advice.

In addition, some 80% of HR directors believe employees will expect some form of help from their employer.

But the research found that only 41% believe employees are willing to pay for advice.

The research also found that nearly half (48%) of HR directors think employees will hold them responsible if staff make poor decisions.

From April 2015, employees will be able to access their defined contribution schemes more flexibly following the pension reforms announced in the Budget 2014.

Rona Train, partner at Hymans Robertson, said: ”It’s very difficult to see how Pension Wise will be able to give people the support needed to understand the range of options and the tax implications of any decisions they make. In that context, we’re surprised that around half of the UK’s biggest employers are confident it will be adequate.

“In our view, the two biggest issues are the quality of the guidance Pension Wise will offer and the lack of support in place for people age 55-plus that can start drawing on their pension.

“The risk is that people will start eating through pension savings only to find they don’t have enough to retire when they want to.

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“Individuals need advice, but they don’t value it, and certainly not enough to pay for it. Only 22% said they’d be willing to pay for external advice and, of those, they are only prepared to spend on average just £37 for it.

“People need access to better tools to help them understand their own personal circumstances. They need to be able to appreciate the impact of withdrawals from their pension schemes, particularly in relation to when they’ll be able to retire with an income that’s adequate, and then what levers they can use to get back on track.”