Out there lies a warm ocean of desert islands, sun, sand and palm trees, where individuals can choose how and when to tax-efficiently access their pension fund and realise the retirement dreams they have worked so hard for.
There also lies rocky outcrops, icebergs, pirates, hurricanes and sunken wrecks, where individuals can miss opportunities, pay more tax than they need to, run out of money and see their dreams of a happy retirement sink into the murky depths.
You will no doubt be familiar with new pension freedom changes that come into effect from 6 April 2015, billed as the biggest changes in pensions in living memory. While this creates opportunity, there are also risks.
Practical tips for your staff and business
As a progressive employer, you are ideally placed to help your employees, but pension freedom has implications for your business too. You will probably need to make some changes to your pension scheme, communications and processes in order to create an environment that nurtures educated, well-informed retirees who can take advantage of the new freedoms given to them. For example:
- The government’s free Pension Wise service will give general support for free. Direct your staff to this service in the first instance but expect a whole lot more questions to come back from these sessions.
- How do you help protect your employees from poor advice? Circulate information from the regulator/insurer/employee benefits provider on when information becomes available. When you receive updates from a trusted source, let staff know about it. They value your guidance and support. See below for some more information on trusted sources.
The Pensions Regulator (TPR)
Financial Conduct Authority (FCA)
- Are you ‘pension freedom ready’? Are the new freedoms actually available within your pension scheme? Get in touch with your pension consultant or provider and ask some questions.
– Can members take their entire pension as cash?
– Will individuals need to take out new plans in order to access flexible income?
– Are any processes in place to stop individuals making an irreversible decision?
– Does a policy need to cease in order to take benefits?
- Pension freedom is all about taking benefits, but younger staff need as much help to build a pension fund. You can help promote sensible spending. Education and advice delivered at regular intervals in an individual’s careers can help foster a culture of healthy money management that will, in turn, deliver good outcomes at retirement.
Take positive action to deliver the best outcomes for your employees
Get in touch if you would like to speak to us or for further information about any of the areas discussed.