It is only three months until the landmark Freedom of Pensions proposals come fully into force. Yet a survey of 250 employers by Jelf Employee Benefits has found that there is little action or awareness by employers and employees of the huge change in policy which will enable the over 55s to access all defined contribution pension savings as they see fit.
Seven in 10 (70 per cent) employers questioned have yet to take any action with regard to the proposals. Furthermore, only seven per cent of respondents have both reviewed their offering and sent employee communications to explain the impact of this regulatory change.
The survey also shows that savers in pension schemes may not yet fully understand or appreciate the new flexibilities. Despite the high media profile of this policy following the announcements last year, only eight per cent of employers have received any approach from their employees on this important topic.
Commenting for Jelf Employee Benefits, Steve Herbert said: ‘This is probably the biggest single change to the pensions landscape in a lifetime — and is supposedly driven by the desire of savers to have much greater access and flexibility regarding their retirement savings. Yet awareness of this issue currently seems frighteningly low.
‘We are concerned that both employers and employees need to be better educated on this important topic. Without such education many older employees could make ill-informed decisions regarding their pension savings. We are also worried that criminals may see this lack of knowledge as an opportunity to create new pension scams with the express aim of separating employees from their retirement funds.’
On a more positive note, the survey also reveals that employers are supportive of the announced changes, with 63 per cent welcoming the proposals. However, more than half of this group are also concerned about potential increased administration and employer costs. Only 15 per cent of employers do not welcome the change of legislation.
Herbert concluded: ‘Our survey suggests that the proposals are broadly being welcomed, but it is really important that employers review their offering and communicate the changes to their workforces. And with only three months remaining until full implementation the time for action is now.’
Photo by Stuart Miles, sourced from freedigitalphotos.net.