Almost two thirds of pension schemes think the Government’s guidance guarantee will not provide savers with enough support, according to a survey by Mercer.
In March’s Budget, Chancellor George Osborne announced that savers would be able to take their entire pension pot as cash once they reach 55. Alongside this he pledged that everyone would received “free, impartial, face-to-face” guidance once they reach retirement.
The FCA’s consultation on how the guarantee will work said there will be “no limits” to the number of times savers will be able to access the service once they reach retirement.
A survey of 300 employers and trustees by Mercer found that 62 per cent plan to go further than the requirement to facilitate access to the guarantee and will offer additional support to savers.
Mercer UK defined contribution savings and product leader Roger Breeden says: “Receiving generic guidance provided shortly before retirement will be useful, however, for most DC savers it will be too late. To increase their chances of getting a decent pension individuals need to make their investment and contribution choices at a much earlier stage.”
The Government also plans to mandate regulated advice for those seeking to transfer out of a defined benefit pension scheme.
Just over three quarters of respondents to the survey said they expect less than 20 per cent of DB members to transfer out, while just 16 per cent expected more than 40 per cent to leave.
Breeden says: “Such transfers, especially in great numbers, could have an impact on asset liquidity, administration processes and the employer covenant, so regular monitoring and building it into risk management programmes is essential.”