Research conducted by the Pensions Regulator has found that 30% of UK employers have allegedly failed to disclose adequate guidance to their employees on defined contribution (DC) pensions.
A review of retirement information, which looked at 97 DC schemes, found that 30% had alleged legislative breaches of retirement disclosure regulations, while 6% of scheme were referred to regulator casework teams because substantial changes were required for their retirement literature.
On a more positive note, the report found that 98% of DC schemes offered the open market option (OMO), although take up for this was low, at 23% of DC members retiring. It was also found that 57% were deemed to have had some scope for improvement in the standard of retirement information sent to members.
David Cassidy, chief executive officer at Wealth at Work, said: “Many employees save diligently into their pensions throughout their lives yet if employers don’t ensure retirement income options are understood, these savings may not be converted into the most appropriate retirement income. Employees now have a wealth of choice and utilised correctly, they can significantly boost pension income, yet all this choice means confusion.
“Sending members densely worded printed packs of information is not particularly helpful and the Pensions Regulator is to be applauded for emphasising that good communications, which I take to mean guidance people will actually understand, can significantly impact the future of those approaching retirement. In our opinion, a well implemented financial education programme along with the appropriate advice is the best solution to help employees make more informed decisions crucial to their immediate and long term financial well-being”.
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