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Employers taking no action on pension freedoms

Fears are growing that firms and their employees are not prepared for the radical pensions reforms which come into effect from April this year.

Seven in 10 firms have not taken any action despite 63 per cent saying they supported the Government’s plans, according to a survey of 250 employers by Jelf Employee Benefits.

Less than one in 10 businesses have reviewed what they offer staff and attempted to explain the changes, the report reveals.

Jelf Employee Benefits head of benefits strategy Steve Herbert says: “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.

“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.”

As well as the new options created by the Budget, smaller firms also have to deal with their auto-enrolment duties as millions hit staging dates in 2015 and 2016.

Herbert adds scammers could begin using public confusion over the Budget to tempt savers into unlocking their pensions early.

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. Why is it automatically assumed that employers really give a fig? They have a hard enough time concentrating on the day job – or don’t the daft souls in Financial Services and the Government understand this?

  2. @Harry – Agreed, unless the company is large enough to have someone take on the role specifically (98% of firms aren’t large enough for that) why would a firm want to direct precious resources towards something that they really don’t have to?

  3. I think the impact freedoms are likely to have on AE takeup haven’t probably been thought through yet by many employers – discussing AE with a client earlier this week she explained that many of their staff wouldn’t join given their age.

    I went on to explain that, 12 months ago, I’d have tended to agree – but now you could join an Employers pension scheme – at worst ‘double yer money (!)’ and then take it out as a lump sum – potentially tax free if done with foresight and planning….

    Pension and broader retirement planning is moving into a very different ‘world’ and I suspect it will take a while before the practicalities (and planning opportunities) become second nature.

  4. … I forgot to add (!) …. it will be interesting to see if any DB schemes adapt their scheme rules to, in some way, reflect the proposed freedoms.

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