Less than half (43%) of respondents plan to offer a drawdown option as part of their pension plan, according to research by Towers Watson’s UK DC master trust, LifeSight.
Its survey of 100 employers also found that 87% of respondents believe that their employees will want to access some or all of their pension using the new drawdown flexibilities after the age of 55.
The research also found:
- 44% of members that will reach age 55 in the next decade are likely to want to use the drawdown flexibilities.
- Around half (51%) of trust-based schemes have not utilised any targeted communications to members aged 55 and over since the reforms were introduced.
- When asked why pension plans have been reluctant to offer drawdown thus far, 69% said it is because they believe the management and implementation of drawdown is too difficult. More than half (59%) cited governance issues, 53% named a lack of desire from the employer and 45% believed cost is a barrier.
Fiona Matthews, managing director of LifeSight, said: “The issue of people wishing to access their pension pots flexibly and understanding what drawdown options are actually being offered is a major challenge for pension providers and employers.
“Our survey shows a significant demand from employees to use drawdown for some or all of their pension benefits. However, many employers and trustees have been slow to respond because they have been careful to balance giving people what they want with mitigating risk.
“Regular, consistent communication is crucial. Trustees must ideally engage with members many years before retirement and, most crucially, with those now aged over 55 to ensure that they are fully informed and empowered.”