One year after the introduction of pension freedoms, employers are still grappling with the ways in which to educate their staff on pension reforms, with the popularity of government provision waning.
Research from Close Brothers Business Barometer, which questions almost 900 employers across the UK, found that just 16% of employees are referring staff to Pension Wise, the government’s free guidance service. This compares to 20% of employers in October 2015 saying their staff were turning to Pension Wise for more information about the pension reforms.
These figures comes in the wake of the Chancellor’s recent announcement that the government would replace Pension Wise, the Money Advise Service and the Pensions Advisory Service with a new slimmed-down money guidance body, in order to direct more funding to the front line and focus support on areas of greatest consumer need.
The Close Brothers research highlights that employers are increasingly looking at arranging solutions to educate staff, with 30% of employers saying pension engagement for all staff was used as a step for responding to pension reforms, compared to 25% in October 2015. This increase is also mirrored by the increase in the number of employers using retirement seminars to help staff understand their wider choices, up from 8% in July 2015 and 12% in October 2015 to 14% now.
Over a third of employers (36%) give their staff access to financial advice to help them understand the best options for them in retirement.
Jeanette Makings, Head of Financial Education at CBAM, commented: “A year on from the introduction of the pension reforms, and with many employees still confused about the options open to them, employers are clearly taking the initiative with more arranging bespoke guidance for their people rather than using Pension Wise. This is not really surprising as employers will not only want the guidance to cover their own pensions and benefits, but they will also want the support to reflect their own values and their particular people culture.
“The recent Budget saw an increase in the tax and NI relief limit for pension advice in the workplace encouraging more employers to arrange pension advice for staff, which is hugely positive and is a real signal of an expected increase in demand. It is encouraging to see more employers are already increasing their support for staff, engaging them with the pension reforms and providing dedicated retirement seminars. But there is still more that can be done. Employers play a central role in staff wellbeing, and ensuring staff are well informed about how to make the most of their workplace benefits, including pension decisions, is essential for staff retention and protecting the business bottom line.”